Tales of the unexpected (results of taxation)

 

[clay tax collector figure*]

What do Irish traditional houses, California avocados and Hungarian sausages have in common? They are all the unintended results of government tax policy. While those tax laws are long off the books, their impact is still visible.

[Irish traditional stone cabin]

A traveler in the countryside of Ireland immediately notices that the traditional cottages have tall doors and very few windows. While such a layout may be logical in terms of insulation, i.e., keeping in the heat during the cold winter, the actual reason is far more fiscal, specifically to avoid the heavy English tax on houses with more than six windows. The Irish referred to this levee as the “typhus tax” as the lack of air circulation created ideal conditions for the disease. This strange result demonstrates that what is convenient for the tax collector is not always beneficial for the taxpayer even beyond the financial element.

[avocados]

California is a major player in the world food production market, producing just about everything, including rice. Avocados are a more recent significant addition, dating from around 1970. The state now provides the vast majority of US domestic production, almost 140 thousand tons. While the tree does produce commercial amounts quickly and the product has a high commercial value, the actual trigger for the massive investment in this fruit was US income tax policy. Apparently, there was a closing of a loophole in the federal tax code for citrus and almond orchards, which had allowed the rich to avoid paying taxes for many years. Instead, in compensation, for seven years, from 1970 to 1976, the congress made it very worthwhile to invest in avocados. The government has long since eliminated this tax break but avocados have gone from being exotic to common. They are an example of a fruit of the IRS’s labor.

[Hungarian sausage with cabbage]

Finally, Hungary has hundreds of types of sausage, ranging in size, taste and spiciness. However, most of them are made from pork, not beef. Pork is often the preferred meat in counties where the land is insufficient or does not support cattle. In Hungary, the cause of this preference is actually tax, notably that not imposed by the Ottomans when they ruled the country from 1541-1699. As Muslims, they did not eat pork. Consequently, they did not tax pork, rendering it the least inexpensive meat. Even today, the tax is relatively low, at 5%. This preference shows that the belief that taxing a forbidden item is to recognize it and therefore encourage it is apparently incorrect.

Every country has had its own style of taxation weirdness. Some of the results were temporary and disappeared upon cancellation of that policy. Others have impacted a nation long after the knowledge of the law disappeared from people’s memories.  In any case, the results of taxation policy can be very surprising.

* Picture captions allow the blind to fully access the Internet.

All pictures via Pixabay