The Law of Probability figures into everything we do, from taking an umbrella in the morning to picking a mate.
June 07, 2012
Big day for taxpayers today. I suppose what the bail out means determines how high a plane we bail from.
Sometimes, you have to remind yourself where you came from to understand where you are.
That's why I keep a copy of the original 1913 income-tax code on my bookshelf. Unfortunately I can’t use it today.
The history books will tell you that it was Wyoming's vote in the affirmative that gave the 16th Amendment the three-quarters majority needed to amend the Constitution and tap into our personal income.
My conservative friends would say,"Confiscate."
In truth, the confiscating began before that. The first income tax was an "emergency measure" passed during the Civil War, but was repealed in 1872. Even the Commissioner of Internal Revenue wrote the chairman of the House Ways and Means Committee, saying that the income tax was "most obnoxious, inquisitorial and expository."
Where are those commissioners today?
In 1894 the income tax returned as "an act to reduce taxation, to provide revenue for the government, and for other purposes." The Washington Post characterized it as "an abhorrent and calamitous monstrosity that punishes everyone who rises above the rank of mediocrity."
A year later the Supreme Court found the income tax unconstitutional because it was a "direct" tax not apportioned among the States based on population, as the Constitution required.
So a constitutional amendment was put forward, ratified by the states, and in 12 simple words -- The Congress shall have power to lay and collect taxes on incomes - our world was changed forever.
Of course, in 1913, the tax code was a bit simpler than it is today. The 1040 form was a mere four pages long. It levied a 1% tax on net personal incomes above $3,000. There was a 6% surtax on incomes of more than $500,000.
Although the income tax was brand new, it came with deductions. $3,000 for individuals; $4,000 for married couples. Taxpayers could also deduct business expenses, interest on personal debt, state and local taxes paid, and, my personal favorite, "Losses actually sustained during the year incurred in trade or arising from fires, storms, or shipwreck."
And if you survived and caught cheating on your taxes, the penalty was an additional 100% of the tax owed.
Farmers, who still made up a large swath of the population, even had their own provisions.
Despite these exceptions, the income tax was remarkably simple and short. The entire 1913 federal tax code was written on 400 pages.
Today, the complete tax code, with accompanying regulations, contains over 60,000 pages and is so complicated that even CPA’s don’t understand it. At least mine doesn’t.
The only plus is that the IRS might be a little hazy on it too. And that of life's two certainties, it's the one you can get an extension on.
We're all for paying our fair share. Maybe, we can make the process a bit...dare I say, less daunting.
Awaiting your thoughts here at the Eye. And try not to tax yourself. The Government will do that for you.