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I've written a lot about the ingenuity of ancient people. About the same time that the Antikythera Mechanism sank off the coast of Greece, the Roman Republic had an interesting method of collecting taxes: they auctioned off collection rights to "tax farmers."

The government in Rome, like all governments, needed money. They had to give the soldiers weapons, buy raw materials to build ships, pay construction workers, etc. Given that they were trying to fund all of that from a tax base spread across a huge geographic area when nothing moved could move faster than a horse, the Roman government had challenge keeping the coffers full.

The reality is that collecting taxes -- in the days before direct withholding from paycheck -- was a gigantic hassle. You had to have all these tax collection employees (on the payroll themselves). They had to go out to the provinces and get the locals to pay, which meant more expense to send them there, to provide soldiers for their defense, etc. Inevitably some local wants to pay you with ten chickens or a wagon load of lumber, which means that your tax collector has to turn around and sell those goods at market to convert them to cash, during which some value lost in the transfer. Then the local cash has to get changed into some suitable international currency (more loss of value), loaded on a ship and sent back to Rome (more expense and risk of loss through pirates, embezzlement, shipwreck, etc.). And if soldiers or local contractors in some other province need to be paid the coinage from Province A has to go back to Rome and be sent back out to Province B. All of this collection takes a lot of time, and when the expenses back home are spiking while you wait for the money to trickle in it becomes clear that Rome could face serious cash flow problems.

The Roman Republic's creative response to the problem was the system of "tax farming." Here's how the system worked:

• The Roman government holds an auction among private contractors, who bid for the tax-collection contract in a given province. These contractors were called publicani, or publicans.

• The government awards the contract to the highest bidder, the contractor who will pay the most for the tax collection franchise for a given area during a given period.

• This is the important part: the winning contractor pays the government the full value of the contract up front upon winning the bid. Essentially, he loans the government the revenue it expects to collect from that province for that period. The government is borrowing money against anticipated revenue.

• The government agrees to pay the publican interest on the loan for the period (a year or whatever). This is one of two ways that the publican makes a profit.

• The publican, and his employees and subcontractors, then go out and collect the revenues from the locals. If they can collect more than the amount they paid for the franchise they make a profit (the second profit center, after the interest the government pays).

Obviously, the system is called "tax farming" because the publicans treat the province like a farm: they essentially lease or rent it from the government and then try to "grow" the revenues.

The Catholic Encylopedia (www.newadvent.org) explains the reputation that publicans earned, especially in the province of Judea:

Publican, in the Gospels, is derived from the publicanus of the Vulgate, and signifies a member or employee of the Roman financial companies who farmed the taxes. From the time of the Republic the Roman State relieved itself of the trouble of collecting the taxes in the provinces by putting up the taxes of each in a lump sum to auction. The highest bidder received the authorization to extort the sum from the province in question. Such a system afforded ample opportunity for rapacious exactions on the part of the company and its officials, and the abuses were often intolerable. On account of these, and more, perhaps, because of the natural though impotent Jewish hatred of the Roman supremacy, those of the Jews who found it profitable thus to serve the foreign rulers were objects of execration to their countrymen. In the Gospel narrative we find them as a class habitually coupled with "sinners" and the "heathen". The attitude of Christ towards this, as well as other despised classes, was that of an uplifting sympathy. One great reproach cast upon Him by His enemies, the self-righteous Scribes and Pharisees, was His friendship for, and association with publicans and sinners; and consistently with this conduct it pleased Him to choose as one of the twelve Apostles Levi or Matthew the Publican (Matthew 9:9).

The system of tax farming during the Republic was profitable enough that the government didn't impose the same level of taxation on Romans in Rome: the provinces subsidized the capitol.

The problem with the system was that it depressed economic growth. The publicans were incentivized to extort ever higher amounts of revenue, especially on cash businesses (again, getting paid in chickens is a hassle, so they tended to squeeze merchants and business owners -- then as now the engine of economic growth). This not only created resentment among the most prominent citizens, it also incentivized them to avoid taxes by hiding income, moving to low tax areas, etc. Same as now.

Augustus began to shift the Empire away from the tax farming system to something that more resembled a flat tax, collected directly by the Imperial bureaucracy. The government stopped systemic borrowing and interest to fund its operations. The imperial tax system became more predictable, more consistent and more fair.

This, combined with the security of the "Pax Romana" (roads, legions, etc.) of the The result was an explosion of economic growth.

Funny how that works.

For a great article on the Roman system of tax farming to to this great Roman history website.

Incidentally, a similar system existed in Imperial/pre-revolutionary France, where these contractors were called Farmers-General (more info at the link).