The world’s first tax, imposed 3,000 years BC, was called the “heqat,” and it required farmers to pay 20% of their harvest to the pharaoh. Given what we know about human nature, we can assume the first efforts to avoid the heqat began around 2,999 BC. Thus began a fiscal arms race that persists until today. Pharaohs, kings, emperors, and even democratically elected legislatures impose taxes to finance government operations. Then, clever planners step in to keep their clients one step ahead of the rules.
Last week, the New York Times published a fascinating story about a papyrus scroll discovered decades ago in the Judean desert west of the Dead Sea. It consists of a memorandum for a judicial hearing against two men named Gadalius and Saulus. Specifically, it details how they schemed to fake the sale and manumission of several slaves to avoid paying taxes to the Emperor Hadrian sometime around AD 130.
The mechanics of the fraud sound like something a too-clever accountant or attorney might try today. Saulus, who lived in Judea, arranged the sale to Chaereas, who lived in nearby Arabia. Gadalius, who was the son of a notary, then forged the appropriate paperwork. But the slaves themselves stayed with Saulos. “Thus, on paper, the slaves disappeared in Judea but never arrived in Arabia, thereby becoming invisible to Roman administrators,” said Anna Dolganov, an Austrian archaeologist who deciphered the ancient scroll. “Henceforth, all taxes on these slaves could be avoided.”
The scroll offers remarkable insights into life and law under the empire. Gadalius was no stranger to the law, with convictions for extortion, counterfeiting, banditry, sedition, and failing to show for jury duty. We learn about the torture of one of the slaves, and the “enhanced interrogation” techniques authorities used to question the miscreants. There was an informant – possibly Cheareas—who dropped a dime to Roman authorities. We see defendants pointing fingers elsewhere, with Gadalius blaming the forgeries on his conveniently dead father and Saulus blaming the manumissions on Chaereas. We even learn how effective prosecutors were in pursuing their case. “This is the edge of the Roman Empire, and boom, we see legal practitioners of high caliber who are competent in Roman law,” Dr. Dolganov said.
Sadly, the scroll doesn’t tell us how the trial ended. If the defendants were convicted, and they were lucky, they could have received anything from fines and exile to work in the salt mines. If the judge was having a particularly hard day, though, they could have been sentenced to “damnation ad bestias.” That sounds impressively civilized in the original Latin. But in English, it translates to “condemnation to beasts,” meaning the convicted men would be killed by wild animals in a public spectacle.
The sort of sleight of hand that Gadalius and Saulus used in their effort to sidestep the emperor lives on today in countless forms. (Perhaps even more, now that getting caught doesn’t mean leopards eating your face!) Twenty years ago, for example, the accounting firm of KPMG admitted criminal wrongdoing for its “Son of BOSS” scheme that involved faking losses from options trading. And even today, car buyers in states with high sales taxes like California and New York will sometimes establish LLCs in zero-tax Montana to buy their vehicles. (Of course, police in California and New York aren’t shy about stopping drivers sporting Montana plates on their cars.)
So, is getting out of a tax bill – legitimately, or not – the world’s second-oldest profession? Maybe! Whether it is or not, we understand you don’t just want to know how much you owe. You want to know how to pay less. So, call us for insights you need!