Taxation by auction: fund raising by 19th century Indian guilds

摘要

We desciibe a unique institution used by 19th century Indian guilds to raise funds: on certain holidays only one shop was allowed to operate; an auction would be held to sell this right, and the winning bid would go to the guild fund. We compare this"taxation by auction" mechanism with more conventional tax schemes and show that under certain conditions, not only will a majority of guild members prefer to be taxed via an auction, but that this form of taxation will be more equitable.