This paper evaluates the long-standing hypothesis, dating back to the physiocrats and classical economists, that taxing property is less detrimental to economic development than taxing income. For centuries prior to the French Revolution, France's central direct tax -- the Taille -- was levied on income in the north and on property in the south, along a border inherited from Roman-era institutions. 

 

Using novel individual-level genealogical data covering more than 7 million individuals since 1500, we implement a spatial regression discontinuity design and two difference-in-differences designs exploiting the Dauphiné province's tax switch around 1600 and the increase in fiscal burdens during the Thirty Years' War. Property-tax regions exhibit higher manufacturing employment shares (+25%), population density (+30%), and urban area (+90%). These patterns are consistent with income taxes distorting entrepreneurial effort more than property taxes. Despite harmonization after the Revolution, the former property-tax regions industrialized faster (+69% more factories per km2 in 1834) and maintain higher income and population density today.