The French monarchy had operated for over a century without resorting to a legislature. Since 1614, French kings had managed their fiscal affairs by increasing the burden of the ancient and unequal system of taxes, by borrowing money, and sometimes by selling noble titles and other privileges; however, because noble titles exempted the holder from future taxes, the purchasers of titles were effectively buying an annuity.

This led to the long-running fiscal crisis of the French government. On the eve of the revolution, France was so deeply in debt as to be effectively bankrupt. Extravagant expenditures by Louis XIV on luxuries such as Versailles were compounded by heavy expenditures on the Seven Years' War and the American War of Independence.

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Many public officials had to buy their positions from the king, as well as the right to keep this position hereditary; they of course tried to have these expenses repaid by making a profit out of their appointment. For instance, in a civil lawsuit, judges had to be paid some fees by the parties (the épices); this put justice out of reach of everybody but the wealthy classes.

The system also excluded the nobles and the clergy from having to pay taxes (with the exception of a modest quit ren). The tax burden was thus paid by the peasants, wage earners, and the professional and business classes. These groups were also cut off from most positions of power in the regime, causing unrest.

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During the régimes of Louis XV (reigned 1715-1774) and Louis XVI (reigned 1774-1792) several ministers, most notably Turgot and Necker, unsuccessfully proposed to revise the French tax system to tax the nobles. Such measures encountered consistent resistance from the parlements (law courts). Members of these courts bought their positions from the king, as well as the right to transmit this position hereditarily (the so-called Paulette tax). Membership in such courts, or appointment to other similar public positions, often led to the elevation into the nobility (the so-called noblesse de robe – "nobility of the robe", as opposed to the nobility of ancestral military origin, the noblesse d'épée, nobility of the sword). While these two categories of nobles were often at odds, they both sought to keep in place their privileges.

Because the need to raise taxes placed the king at odds with the nobles and the high bourgeoisie, he typically appointed as his finance ministers, (to use François Mignet's term) "rising men", usually of non-noble origin. Turgot, Chrétien de Malesherbes, and Jacques Necker successively attempted to revise the system of taxation and to make other reforms, such as Necker's attempts to reduce the lavishness of the king's court. Each failed in turn.

In contrast, Charles Alexandre de Calonne, appointed finance minister in 1783, restored lavish spending more reminiscent of the age of Louis XIV. By the time Calonne brought together the Assembly of Notables on February 22, 1787 to address the financial situation, France had reached a state of virtual bankruptcy: no one would lend the king funds sufficient to meet the expenses of government and court.