On the Role of Confiscation in the Theory of Taxation

Savina Anna Vladimirovna ORCID: 0000-0002-2107-8769 PhD in Law Associate Professor, Department of Civil Law, Institute of Law and National Security, Tambov State University named after G.R. Derzhavin 392008, Russia, Tambov region, Tambov, Sovetskaya str., 181 B anna.savina56@mail.ru

The inability of the state to conduct a competent economic policy at all times led to public outrage, which often escalated into a confrontation between the people and the ruling structures.

This was manifested in various mechanisms, including such an economic measure as confiscation. There were many forms that predestine taxes in various historical periods in the world. They can be evaluated by different parameters: fairness, consistency, expediency of collection, etc.  The formation of modern mechanisms for collecting taxes and fees is a complex process that has gone through many stages of improvement: from forced and unjustified seizures to taxation justified by economic necessity and public interest. To understand the issue under consideration, it is necessary to turn to the historical component of such a phenomenon as confiscation.

General scientific approaches to the issue of confiscation of property are reduced to the fact that this institution is the oldest measure of punishment and relates to criminal law. It is impossible not to agree with this statement. However, a panoramic look at the history of Russia and individual foreign states shows that confiscation did not always pursue an educational goal. One of the purposes of the confiscation of property was to replenish the state treasury and strengthen the power of the rulers. In the sociological dictionary (as in many others), the term confiscation (from Lat. confiscatio — seizure) is English. confiscation; it. konfiskation) means the compulsory gratuitous seizure of all or part of the property belonging to individuals or organizations into the ownership of the state ^[1].

In modern tax law, it is not customary to talk about taxation as confiscation, since its mechanism has changed significantly. Taxation is supported by principles based on the ideas of justice and equality, as well as the need to collect taxes and fees for the functioning of the state and ensuring the interests of society.

Several centuries ago, one of the forms of arbitrariness of representatives of the upper classes was the confiscation of property and products. Confiscation was used both as a measure of punishment, and as a measure of social control of the welfare of the people, and as a measure of a compulsory way of replenishing the state treasury.   For example, in medieval Europe, suzerains could punish vassals or a city by increasing taxes. In the East and in the Islamic states, the opportunity to become rich out of rank was not allowed, and the state controlled the property hierarchy. The wealth of the lawless threatened death and confiscation of property.  Confiscation forced people to create hoards as a means of protecting their acquired property.

However, a struggle against confiscation of property has begun in Europe. Medieval cities struggled with arbitrariness in imposing duties. The English barons at the Battle of Runnymede (1215) opposed the power of the king's right to confiscation in favor of the crown. The result of their victory was the Great Charter on the Protection of the Rights of Subjects to Their Property. In England and Holland, governments were the first to lose the right to arbitrary fees, and the establishment of types and rates of taxes becomes the business of parliament. On the European continent, the struggle for taxes instead of confiscation was waged up to the industrial revolution. It was only in the XIX century that the owners of capital gained confidence in governments and began to invest money not only in bills of exchange and inventories, but also in factories ^[2].

Historians note that the replacement of confiscations with taxation was not voluntary, but was the result of the struggle of the nobility, cities and the common population. It is also emphasized that the institute of taxation is an integral part of the guarantee of private property rights ^[2]. A.V. Demin says that tribute, taxes, and other payments should be attributed to protonalogs ^{[3, p. 24]}. I. A. Mayburov calls tribute a prototype of taxes ^{[4, p. 6]}. However, it seems that in this plane of the issue under consideration, the difference in names does not lead to a difference in the legal nature of these phenomena.

It can be noted that in Russia, the collection of tribute also bore all the signs of confiscation.  In the XIV-XV centuries, in addition to the Horde tribute, tribute was collected from the free population, which was sent directly to the princely treasury, i.e. tribute as a state tax did not disappear, but continued to be collected together with the Horde tribute ^{[5, p. 16-18]}.

A special manifestation of the institution of confiscation of property through over-taxation was found in 1917 in the course of tax measures carried out by the Provisional Government, which established a system of taxation of income and profits, in which up to 90% of the incomes of the rich and well-to-do strata of the population were withdrawn. V. I. Lenin in the article "Imminent catastrophe and immeasurable promises", analyzing the radicalism of tax measures of the Provisional the government noted that they actually lead to the confiscation of the income received, at the same time approved of their orientation ^{[5, pp.215-216]}. V. I. Lenin wrote: "... We can and should be more moderate, gradually move to a fairer taxation, we will separate small shareholders and rich shareholders, we will take very little from the first, we will take a lot (but not necessarily all) only from the second" ^[6].

The peak of the confiscation of property came at a time when, against the background of the financial crisis that worsened in 1917, which could not be settled by additional issuance of paper money, a mechanism of indemnity was introduced at the level of local authorities – forced monetary and in-kind levies. At the same time, according to the Decree of the All-Russian Central Executive Committee (VTsIK) and the Decree of the Council of People's Commissars of October 30, 1918, a one-time emergency ten-billion revolutionary tax was imposed, which was levied according to the layout system and this layout was to be carried out in such a way that the entire weight of the tax fell on the rich part of the urban population and rich peasants. The urban and rural poor were completely exempt from paying taxes, the middle strata of the population were taxed at low rates ^{[5, p. 220]}.

It should also be said about the form of additional taxation of the incomes of "Kulak farms" introduced in 1929 - the individual taxation of Kulak farms with agricultural tax. At the same time, the taxable included income from all sources of agriculture and from all types of non-agricultural earnings.

As it seems, the focus of taxation is shifting from the poor to the rich.

The history of the Ottoman Empire also contains information about confiscation in the context of taxation and the method of exercising State power. At the same time, scientists note that unlimited compulsory withdrawals damage the prosperity of the economy due to their adverse impact on economic activity and the lack of mechanisms to stimulate it. Note the validity of the remark:  "wandering bandits would confiscate everything that is produced, that's why people preferred state confiscations" ^{[7, p. 1-2]}.  

It seems that in the historical context of the theory of taxes, confiscation is one of the forms of forced, unsystematic seizure of property or part of the property of citizens for the formation of the state treasury. As a tribute, as well as other types of compulsory seizures, confiscation is a prerequisite for the formation of a civilized institution of taxation, which is based on the principles of equality, legality, certainty, clarity, etc.

In the theory of effective demand, a tax is a compulsory, economically expedient and socially fair payment through which the state regulates the main economic processes by stimulating demand ^{[8, p. 637]}. In the theory of monetarism, a tax is a forced, economically expedient payment, one of the factors of regulating economic processes through a tight monetary policy, with the help of which stable economic development is achieved ^{[8, p. 637]}.

In accordance with the social contract, citizens grant the State the right to restrict their freedoms. In return, it creates the same "rules of the game" for everyone and must strictly observe them. The law is one and allows you to stop the "war of all against all," as T. Hobbes wrote about it in his famous book Leviathan. Taxes in this concept equalize citizens before the law: the state ensures justice, and society gives it the right to set taxes ^{[8, p. 628]}.

It is also necessary to identify problems that have a deeper, philosophical and legal content. These include restrictions on the rights of citizens to a part of their property that is subject to payment to the budget as taxes. However, it should be understood that an increase in the volume of such restrictions (in other words, an increase in taxes) is of an economic nature and can lead to damage to the production and distribution of goods, works, and services. Of particular importance in this case is the category of legal limits by which the state restricts itself in matters of collecting taxes and other payments to the budgets of the budgetary system.

Such limits also acquire political significance, since excessive taxation entails negative economic processes and, as a result, economic crises. Going beyond taxation creates weakened economic incentives, resistance and tax evasion in society.   

Many economists have tried to prove the possibility of the existence of economic and political boundaries of taxation, starting with A. Smith and D. Ricardo. At the same time, scientists note that the specific values of the tax limit have undergone changes in different historical periods. Of interest is the theory of A. Laffer, who noted that an increase in the tax rate sooner or later leads to the achievement of such a mark from which the total amount of tax revenues to the budget decreases. The Laffer curve shows the ratio of tax revenues and tax rates, displays their dependence on each other (cited in ^{[9, p. 386]}). S. V. Barulin, analyzing this theory, calls it the theory of the tax limit ^[10].

 As it seems, one of the key ideas of the limits of taxation is that excessive taxation and withdrawal of funds from the population leads to an economic downturn. On the one hand, the state replenishes the budget for the implementation of functions. On the other hand, the lack of some freedom of economic activity, the feasibility of the tax burden creates a heavy burden for the whole society due to the strong interconnection of all economic processes. In order to avoid negative economic consequences caused by irrational taxation, it is necessary to form a clear system of legal limits that contribute to ensuring a balance of public and private interests in the process of tax collection.