What did a Tax Free Zone have to do with Caesar’s Power?

The island of Rhodes of colossus fame was a sort of Switzerland of the ancient world. It was neutral, was located on trading routes and hence became rich. It had low taxes (2 percent) and banking and commerce flourished.

When Rome was fighting against Philip of Macedonia, the Rhodians had anti-Roman politicians in power, but still offered to meditate a peace treaty between the two powers. After the Romans conquered Macedonia, the Romans were bitter towards the Rhodians. To retaliate, the Senate established a free port on the Isle of Delos in compete with Rhodes. With taxes just 2 percent lower goods flowed through Delos instead of Rhodes. Trade dropped by 85 percent (as measured by tax receipts) in one year. As Charles Adams put it “The Switzerland of the ancient world was destroyed when the Romans established history’s first tax haven.”

The Rhodians had used the tax money to defend against pirates. The Romans didn’t plan for this, and after Rhodes fell the pirates took over and destroyed trade. This destruction of wealth lead the Senate to give General Pompey excessive military power to eliminate the pirates. But “In the end, the general and his successor (Caesar) would destroy much more than the pirates – the Republic itself would succumb to their power.”

(From Charles Adams’ For Good and Evil: The Impact of Taxes on the Course of Civilization)