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BIN contributor Simon Black

It started on December 8, 1931.

Germany was in a world of pain at the time. They were still financially debilitated from having to make reparation payments after losing World War I, and had just barely recovered from one of the worst bouts of hyperinflation in recorded history.

By the early 1930s, the onset of the Great Depression had taken hold in Germany, driving the government to desperation once again.

They needed cash. And rather than go back to the printing press and risk hyperinflation again, German President Paul von Hindenburg signed a decree to create a new tax called the Reichsfluchtsteuer, nearly 84 years ago to the day.

It was an exit tax… a type of capital control to dissuade people from leaving with their savings.

So any German citizen with a certain level of income or assets who left the country would be charged a 25% wealth tax.

The following year, in 1932, the government generated about 1 million marks in revenue from the tax.

Of course since the tax was a ‘temporary’ measure, it was set to expire at the end of 1932.

But they extended it. And kept extending it.

By 1938, the German government collected an astounding 346 million marks from this tax.

This nearly 350x increase in tax revenue over 6 years is incredible, making the Reichsfluchtsteuer one of the fastest growing taxes in human history.

(By comparison, income tax receipts in the United States grew about 9-fold in the first six years of its history.)

So what was the German government’s secret in having so much success with this tax?

Their secret? the Secret Police