Income sources of countries have significant effects on their institutional structures. To what extent could countries that were more dependent on local taxpayers for their income sources in the early modern period develop their institutional structures? In this study, an answer to this question is sought by comparing the evolution of the Ottoman Empire and French financial institutions, which collected a significant part of their income with the tax farming system (iltizam) between the sixteenth and nineteenth centuries in the context of decentralization-centralization. Wars, the centralization of finance, and thus the emergence of central states are interrelated processes. While some types of taxation became centralized after the French Revolution in France, some remained decentralized. The Ottoman Empire took important steps to centralize the financial structure with the Tanzimat reform.