Quote of the Day (Bob Hope, on Taxes)

“I always like to go to Washington D.C. It gives me a chance to visit my money.”—Bob Hope, on touring the U.S. Treasury, quoted in Daniel Kurtzman, “Bob Hope Jokes: Classic Political Jokes by Comedian Bob Hope,” About.com

Song Lyric of the Day (George Harrison, on ‘The Taxman’)

“Let me tell you how it will be

There's one for you, nineteen for me

'Cause I'm the taxman, yeah, I'm the taxman.”—George Harrison, “Taxman,” from the Beatles’ Revolver LP (1966)

This post represents a holy grail for a blogger—a twofer! "Taxman" was not George Harrison’s best song, nor even his first recorded one (that would be “Don’t Bother Me,” which, come to think of it, might have served as an equally good title for this one). But it did serve notice that the “quiet one” of the Beatles had a sly sense of humor. 

The Beatles’ great lead guitarist—and, as fans (and even principal songsmiths John and Paul) learned, their secret songwriting talent—and the youngest of the Fab Four would have turned 70 today.

(One irony of this song: While George wrote the song, Paul played the lead-guitar solo. An interesting change of roles, no?)

Okay, here’s the second part of the twofer I just referred to: it’s also the centennial of the Sixteenth Amendment to the U.S. Constitution—one of four passed during the Progressive Era, with this one instituting a federal tax on incomes. It was pushed originally as a matter of social equity by farmers and others who had suffered disproportionately from the federal government’s principal means of raising revenues to that time: the tariff. As Jay Starkman noted in a Wall Street Journal piece a few weeks ago, only one-third of the U.S. population earned enough to be subject to the income tax before WWII. Matters have changed utterly since then, of course, with seven out of 10 Americans now subject to the tax—and the long shadow of the IRS.

The situation was even worse in the U.K. when the Beatles shot to fame. As Harrison recalled it nearly three decades later for the Beatles’ Anthology retrospective: “In those days we paid 19 shillings and sixpence [96p] out of every pound, and with supertax and surtax and tax-tax it was ridiculous - a heavy penalty to pay for making money. That was a big turn-off for Britain. Anybody who ever made any money moved to America or somewhere else.”

Somebody should replay Harrison’s comments—and his song—for the benefit of The New York Times, which published James B. Stewart’s “The Myth of the Rich Who Flee From Taxes.” I’m as populist as the next guy, but the experience of Harrison, the Rolling Stones, Gerard Depardieu, and Phil Mickelson (and a whole swath of the PGA, who’ve moved en masse to tax-friendly Florida) constitutes far more than “anecdotal evidence” in support of the “myth.”

(The photo accompanying this post is a cropped version of a UPI image of Harrison, as the Beatles arrived in New York in 1964.)

This Day in American History

February 3, 1913 – With 36 states voting in favor of the measure, the Sixteenth Amendment to the Constitution, authorizing a federal income tax, was ratified.

In researching this post, I couldn't believe my eyes when I saw some supposedly rational citizens of this republic murmuring on the Web that there was no foundation in the Constitution, its amendments or any Supreme Court decisions for the income tax. This claim possessed all the credibility of an Elvis sighting down at the local Piggly-Wiggly.

(Don't go sending me any images of the latter phenomenon – that guy in the rhinestone suit is probably one of those "skydiving Elvis impersonators" still unemployed a dozen years after the highlight of his career—an appearance in the hilarious Andrew Bergman film, Honeymoon in Vegas).

The amendment came about as a reaction to the deeply divided U.S. Supreme Court decision in Pollack v. Farmers, Loan and Trust Co. (1895), which declared unconstitutional an act passed by Congress the prior year to tax incomes uniformly throughout the United States. The amendment was so unusual partly because it was only one of four passed specifically to redress decisions of the high court (the others were the Eleventh, Thirteenth, Fourteenth, and Twenty-Sixth Amendments).

The income tax was first used as an extraordinary measure to produce badly needed funds during the Civil War. (Paying their full share of taxes was the least that the wealthy could do for their country during those years, given that so many well-to-do citizens such as Andrew Carnegie, Pierpont Morgan, Grover Cleveland, and the father of a future President, Theodore Roosevelt Sr., bought their way by purchasing substitutes—often immigrants, such as the Germans and Irish—to take their places in killing fields ranging from Gettysburg to the Red River Valley.)

Compensating for the loss of one government revenue source, the Sixteenth Amendment enabled the soon-to-be-inaugurated President Woodrow Wilson to fulfill a campaign pledge to promote free trade. Later that year, in a special session called at his behest—the busiest in American history up to that point -- Congress passed the Underwood-Simmons Tariff, which represented the first successful reduction in the tariff since the Civil War. The act spurred competition—a hallmark of Wilson’s “New Freedom” program—and reduced prices for consumers.

By year’s end, Wilson had taken off the table an issue that had caused contention for a generation among different sections of the country: the South and West, whose farmers worried that Federal taxes on property would replace excise taxes, and the Northeast, where industrial leaders had built up major fortunes without the government knowing many of the details of how they ran their businesses.

Even in the final year of World War I, when the need for revenue again required boosts in taxes, only 5 percent of the population paid any income taxes. Over the years, as the role of government expanded, that state of affairs would change dramatically.