A taxpayer is a person who has the government on his payroll!
Such taxation is actually a fine for doing well, a fine for reckless thriving, one might joke. It‘s a government program to handicap the hired. It‘s feeding the hand that bites you.
Ronald Reagan, when president in March 1981, also joked about it. “Taxation is the process of plucking the feathers without killing the bird,“ he said, changing it from the original quote by Jean Baptiste Colbert, circa 1665: “The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.”
Yet, in the United States on May 20, 1895, direct taxes, like the income tax, were declared unconstitutional! Remember that Alexander Hamilton started the U.S. Treasury with nothing. Unfortunately, that is the closest our country has come to being even ever since.
“The truth is that the government is penniless,” once explained Willard E. Rockwell. “Before it can spend, it must take from the people. A great many of us seem to have lost sight of the fact that the government owns absolutely nothing. If it promises to give you something, it must first take it from you.”
Though direct taxes were ruled out by the Constitution, Congress in 1862 - to help pay for costs of the Civil War - passed a law that taxed peoples’ income. It went as high as 10% on large incomes, was reduced by a higher exemption in 1867, was greatly diminished in 1969, and abandoned in 1872. In 1894, under the Wilson Tariff Law, a tax of 2% was imposed on incomes above $4,000, but was soon found unconstitutional by the Supreme Court.
In 1913 the Sixteenth Amendment - officially proposed in 1909 by President Taft - made the income tax permanent. But every taxpayer had a personal exemption of $3,000, plus an additional $1,000 if married. The normal tax was 1%! The peak was 7% on incomes of a half-million dollars.
Only five states levied income taxes: Wisconsin, Virginia, North Carolina, South Carolina and Oklahoma. Income, total property and tax payment figures were posted for public inspection. If taxes were not paid within ten days of notice, collectors could seize and sell delinquent properties. Collectors received a commission on their total collections.
Times change. In 1911 there had been no tax after your income, but by 1978 there was no income after your tax, one pundit noted.
Then Came the Deluge
As the workload grew, the IRS in 1952 was completely restructured. Instead of centralizing everything in Washington, DC, they deployed forces, dividing the country into seven independent administrative regions. It set up ten service centers - each to take on about the same number of returns - with district offices in 58 cities, plus field offices in smaller towns.
The heart of the operation, the $20 million digital data processor attended by 357 humans, was housed in the National Computer Center in Martinsburg, WV. This monster - actually three different kinds of computers - posted tax returns in .03 seconds, 9300 per hour! At the same time it started building master files on individuals and businesses on reels of high-speed electronic tape.
The Tax Foundation, a non-profit research organization, in April 1976 set up “Tax Freedom Day” for May 1, announcing it as “the day when the average taxpayer has finally finished working just to pay taxes”. In explanation, the foundation stated that the average U.S. taxpayer (at that time) worked the first four months of the year just to support federal, state and local governments. April 15 is now considered the date when millions of Americans feel bled, white and blue.
As Congress kept tinkering with the tax laws, the tax forms got longer and murkier. In 1863 the tax form took ten lines. In 1987 Ohio Representative Delbert Latta hotly debated the version of tax reform, stating, “I hold in my hand 1,379 pages of tax simplification“.
Today the Internal Revenue Code fills 12 binders with 38,000 pages and runs to over 8,000 sections of exemptions, exceptions, exclusions and special provisions, and not even tax lawyers can always understand it. It was Albert Einstein who was once quoted, “The hardest thing in the world to understand is income taxes”. America may be the only country where it takes more brains to make out income tax returns than it does to make the income.
They still call it a tax return, though, just as though your money is going to make a round trip. How appropriate it is that tax month opens with April Fool’s Day and closes amid cries of “Mayday! Mayday!”.
Taxation Down(ers) Through History
The IRS and its “taxes rangers” now give you three choices: the long form, the short form and the ten year stretch, as one jokester puts it.
Income tax is not a new idea. Only the name is. It actually started back in the stone age. When a tribe’s males went hunting, they left some members behind to protect the women. When they returned they would give part of the bag - a form of tax - to those protectors.
Among latter day practitioners was Nabis, last king of the Spartans, who made selected subjects hug the “Queen” as a way of insuring tax payments. Not the real queen, but an automaton statue of her. Beneath the statue’s covering robe were carefully hidden sharp iron spikes. When the visitor was introduced to “the Queen” the automaton would lift its arms and hug him. He couldn’t escape until he promised to give the king the money he asked for.
Jesus Christ himself, according to Matt. 17:24-27, had to pay a “temple tax”. Taxes in the middle ages, in fact, sprang from church tithes. Payment of 10% tithe dates from ancient Hebraic tradition. An etching by Rembrandt in The Netherlands Museum of Taxation shows Christ holding the coin used for tribune money. This same museum has a hieroglyphic-inscribed Egyptian stone from 2100 B.C., that was hung from a sheep’s neck to indicate proof of tax payment on sheep.
Governments in search of money have taxed a wondrous array of unlikely items, like the ancient Greeks, who taxed doors that opened outward onto public sidewalks, and the ancient Romans, who taxed funerals (unburied bodies actually) and togas, both depending upon their elegance.
Funerals continued to be tax jewels, with some unremembered 19th century Englishman actually tracing 156 separate and distinct taxes on a funeral. In the U.S. some folks in power in Colima, CA, just in 1996 were considering boosting revenue by targeting those least likely to complain, the town’s one million dead. The plan was to charge $5 per grave every year for eternity.
Since early times, salt (salarium) was subjected to taxation. Mined from works on the banks of the Tiber, it became the first mineral to provide Rome with revenue. The word “salary” comes from Roman military personnel being paid money to purchase salt.
Businessmen who wore beards were taxed in Russia by Peter the Great. Men who refused to pay had their beards sheared by government agents. Wigs have also been taxed at times, in Europe and New York. And one early Turkish ruler taxed hosts who invited him to dinner. This was called “tooth money” because it was ostensibly to compensate him for the wear the meal put on his teeth.
The Dutch taxed windows during the 17th century, which resulted in a style or architecture free of windows, light and air. Early American householders were taxed for each door in their houses, which is one reason Victorian homes had no closets. Their loophole was moveable clothes closets called armoirs, since no tax was levied on furniture doors. The French taxed fireplaces. Intended to tax the wealthy, it resulted only in lots of cold homes.
The British claim they invented the “income” tax in 1799, resulting in the London Common Council blasting the House of Commons for “a most partial, cruel and oppressive measure”. England dropped the tax for a time, then revived it in 1842.
In 1874 it included taxing horses. One Cheshire farmer found his loophole by riding a tax-free cow.
Poland started taxing hitch-hikers. A hiker bought a license - $6 for 2500 miles - and received a batch of coupons which he gave to drivers who gave him rides. The drivers used the coupons to enter a national lottery.
Until 1830 wallpaper in rolls was not permitted in England - because it could be taxed at a higher rate if sold in small sheets. The French once taxed newspapers also, by number of pages. So printers found a loophole, publishing huge one-page folding papers.
When they also tried to tax Cognac, in the 16th century, merchants hit on the expedient of distilling the wine to reduce volume. (Consumers were expected to add water.) But consumers rapidly acquired a taste for the undiluted “brandwijn” (burned wine). Louis XIV vainly tried to suppress the practice, doubling, then tripling the taxes, but the practice of distillation spread. England renamed it Brandy.
New Uses for the Old Idea
Working tax ideas don’t fade away. As humorist Art Buchwald joked, “Tax reform is merely taking the taxes off things that have been taxed in the past and putting taxes on things that haven’t been taxed before.”
Pennsylvania farmers, soon after passage of the first internal revenue act in 1791- forerunner of the income tax - staged the “Whiskey Rebellion” , to protest taxes on spirits. Others resented the taxing on sugar, snuff, slaves, houses and land - one collector being reported tarred and feathered when he tried to do his job.
One of the newest considerations was proposed by city officials in Kent, WA. They announced January 1, 1991 they were considering charging businesses and homes a monthly fee - $2 per employee, up to $2 per household - for use of city streets, thus declaring its city streets a public utility.
The most negative example, though, may have been a “tax on heroism”, as announced in a United Press International release. Robert Ardema of Muskegan, MI, retired from the U.S. Air Force and included in his retirement pay was an extra $28 per month. This was awarded, along with the Soldier’s Medal for Valor, during WWII. He had rescued a pilot from a burning plane at a New Guinea air base. Ardema didn’t think that $28 should be taxed, so registered complaints to the IRS, the military and veterans’ groups. But he lost.
Showing how precise the IRS can be was noted in a Life Magazine clip. Minnesota state auditor Mark Dayton, 45-year old heir to a department store fortune, voluntarily slashed his $65,000/year salary to $1, in order to save jobs in his department. When he opened his annual pay report he discovered he actually received only 81 cents. The state had taken 10 cents in taxes and nine cents in other deductions.
The IRS broke its rule not to make a refund under $1 again when a Chicago taxpayer listed his occupation as “slave”. The revenue director explained, “He might need the nine cents due him.”
The Department of Internal Revenue once even taxed women according to the size of their waistlines. It happened when a young women’s junior college held a dance, with admissions varying depending on the size of a coed’s waist measurement. At the time there was a 20% tax on such affairs, so a Revenue agent had to determine the average waistline to figure the average admission price on which he could collect the tax. He ultimately set 24 inches as a fair average.
Famed satirist Jonathan Swift once proposed a somewhat similar tax to be levied on female beauty. When a listener objected, asking, “How could we ever make women pay enough to make such a tax levy worthwhile?” Swift laughed, “Let every woman be permitted to assess her own charms - then she’ll be generous enough.”
Such a tax, in a round-about way, actually exists. Dancer-film actress Betta St. John once complained movie stars, models and other performers should be granted a tax write-off on the theory that they, like machinery, depreciate in value with time. Because they have a limited period of years in which to earn money, they shouldn’t be taxed the same as doctors and businessmen, she contended.
A Carmel, CA, attorney followed this up by asking the Federal Court of Appeals in San Francisco to allow him and his wife to claim depreciation allowances on their bodies because they are getting older. The court took the matter “under advisement”, stating “The couple is in the wrong forum. They should go to Congress.”
Another man, a tax attorney and former five-year IRS employee who helped write the “Your Federal Income Tax“ guide, sued the government when his tax deduction for “brain deterioration” was disallowed. He estimated it cost him $15,000 to educate his brain. “The Labor Department’s statistics state that a person’s normal working life is 40 years,” he explained, “and the tax commission has also ruled that the normal retirement age is 65. So I logically interpret IRS regulations to mean that the cost of formulating my brain into a capital asset can be depreciated over a period of 40 years.” He didn’t win either.
Games People Play
The IRS deals with a lot of varied tax concerns, as might be expected. Included in the “gains that people play” was a family of Quakers in Whittier, CA, who once refused to pay 72.6% of their assessed income tax. That was the amount they figured would be used for military spending, which their religion abhorred. And a storekeeper in Albany, NY, listed “Food for kittens that catch mice in the store” on his tax return. Agents thought a bit and allowed it as a business expense.
One Californian did his own tax returns and deducted $309 as “income tax costs”, figuring his 61.8 hours of preparation time at $5 per hour. The IRS disallowed, while admitting such cost would be allowed if done by a professional tax preparer. The man refused to accept the decision and appealed to the Tax Court, claiming this meant he was in “involuntary servitude” for the federal government, a practice clearly outlawed by the 13th Amendment’s anti-slavery statue. But the Tax Court decided the time used to prepare a tax return was “a necessary corollary to the requirement that a return be filed”.
Even erotica has gotten write-offs, however, when placed right. Some years back the Indiana University’s Institute for Sex Research announced in Playboy Magazine that the U.S. government would allow one to deduct the actual appraised value of your contributions to “social science”. And the price on pornography runs high. One film collection was appraised at $3,500, while a gifted 10-inch Mexican phallic icon fetched a $1,200 write-off.
An embezzler beat the system when a Federal judge in Milwaukee, WI, ruled he need not pay income tax on the money he stole.
In a 1977 interview Gary Mason of Rexford, ID, bragged he hadn’t paid income taxes since 1969, though every year he religiously filed a return. He just didn’t include any income figures. He dealt only in cash, never dealing with any bank or other institution where a paper trail might be left to follow. He cited the 4th Amendment, outlawing warrantless searches and seizures of private papers and effects in his fight. He admitted to being a member of a small group of like-minded tax protestors, centered largely in the West, some of whom have been prosecuted, some sent to jail, but some having never been discovered to be taken to court.
Leonard Barris, who tried to beat the system in an opposite way, wasn’t lucky. The IRS caught him trying to cheat the federal government out of over $350,000 in tax refunds, by filing 83 tax returns.
Agreed, it is every American’s duty to support the government, just not necessarily in the style to which it has become accustomed.
Occasionally protesters let their minds be known. One taxpayer sent payment in pennies inside a jar of honey. Another enclosed razor blades, another sent torn parts of an old shirt, another, when his medical deductions were questioned, mailed in his contact lenses and false teeth.
After all is said and done, where but in Washington, DC, could you get 500 Congressmen, 400 lobbyists, 300 economists and 200 computers working on a plan to simplify taxes? Especially when past reports have shown the locale with the highest rate of tax evasion to be Washington, DC!
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