- - Wednesday, April 13, 2016


For the legions of procrastinators who have yet to file their 1040 Forms, the hours to come before April 18 may be the most taxing of the year. It wasn’t always that way, however. The annual squeeze on our purses is only a century old and its history is a classic example of Potomac fever running through the Capitol corridors like the plague. Here’s a line-by-line account:

Line 21: Other income. List type and amount. When the idea of a permanent income tax was broached in Washington in the late 1800s, the Treasury was overflowing with money. In fact, from 1866 to 1893, there were surpluses, thanks to hefty revenue from tariffs and excise taxes. Not one penny of additional tax money was needed.

Line 19: Farm income or (loss). The individuals who were down and out at the time were southern and western farmers, hard hit by overproduction and falling prices. They resented the rising wealth of industrial barons and corporations. An 1890 study revealed that of the more than 4,000 millionaires, most lived in the Northeast. So farm congressmen campaigned for an income tax for these high-rollers.

Line 13: Capital gain or (loss). Congress passed an income tax bill in 1894, but the Supreme quickly disallowed it on the grounds that it violated the constitutional provision relating to direct taxes, which had to be apportioned among the states. Farmers were outraged because the court earlier had upheld the validity of a tax levied during the Civil War. Opponents were delighted.

Line 23: Educator expenses. In April 1909 when the high court was reconstituted, farm congressmen educated the public on the necessity for another income tax bill. But opponents fought back by sponsoring a constitutional amendment authorizing the tax, figuring that the legislative path would be abandoned in favor of their ploy, which would never be ratified by three-fourths of the states.

Line 26: Moving expenses. What followed was one of the most moving debates in Congress. Sponsors of the amendment — mostly Republicans — denounced it as a “tax upon honest men and exemption … of the income of rascals.” Yet Congress voted in favor, 77 to 0 in the Senate, 318 to 14 in the House.

Line 8a: Taxable interest. Not surprisingly, farm states rushed to approve the amendment after it left Congress in July 1909, but there was also some surprising support from eastern states; Maryland, for example, was one of the early ratifiers. New York, the No. 1 home of millionaires, also voted in favor. Still, by the end of 1911, 31 states had approved, five short of the required number. Opponents thought the measure dead, for no amendment in history had survived such a lengthy audit.

Presidential Election Campaign Contribution: Interest in the amendment was rekindled in the 1912 presidential election. The Democrats and third-party Progressives favored the amendment, while the GOP kept a low profile. When Democrat Woodrow Wilson won the election, the die was cast. The 36th state, Wyoming, put the amendment into effect in February 1913.

Line 42: Exemptions. The first tax affected only about one-half of 1 percent of the population. Only $800,000 was needed to administer the law, with a grand total of 34 field agents employed by the Bureau of Internal Revenue. State officers were exempt from paying taxes, as were federal judges and the president.

Line 64: Federal income tax withheld. Most Americans got their first exposure to a 1040 Form in 1943 during World War II when the tax was democratized. Withholding was introduced that year, but the tax specifics were so complicated that President Franklin D. Roosevelt issued a veto, appropriately on George Washington’s birthday. “The American taxpayer,” wrote Roosevelt, “has been promised of late that tax laws and returns will be drastically simplified. This bill does not make good that promise . These taxpayers, now engaged in an effort to win the greatest war this nation has ever faced, are not in a mood to study higher mathematics.”

Line 78: Amount You Owe. Congress overrode the veto.

Thomas V. DiBacco is professor emeritus at American University.

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