100 Years Ago: Tax, Tax, Tax

Tax returnThe following was adapted from the Improvement Era magazines of April 1911 and May 1911.

Inheritance Tax

The largest inheritance tax on record in the United States was lately received by the state of Utah. The check, dated March 1, 1911, was received by State Treasurer David Mattson, on the 9th of March, from Mrs. Mary W. Harriman, executrix, and was made out for the amount of $798,546.85, being the inheritance tax on the late Edward H. Harriman’s property in Utah.

The legislature on the 10th passed a bill appropriating $750,000 of the amount towards the building of the state capitol, in Salt Lake City, which had been arranged for earlier in the session, and for which a bond issue of one million dollars had been authorized.

[The story also appeared in The New York Times. The inheritance tax was 5% on $15,980,937 of Union Pacific stock. The Union Pacific Railroad was incorporated under the laws of Utah, hence payment to the state. In 2011 the Federal estate tax was 35% with Utah no longer having an inheritance tax nor an estate tax.]

Corporation Tax

The corporation tax provision in the Payne-Aldrich tariff act was held by unanimous opinion of the United States Supreme Court, rendered March 13, to be valid. The decision was announced by Justice William R. Day, appointed to the Supreme Court from Ohio, in 1903.

The opinon was an elaborate treatment of the subject, and the tax was declared to be an excise tax on the doing of corporate business, and not a direct tax on the ownership of property. It was held that the tax was not applicable to the real estate “trust” of Boston, and the Minneapolis syndicate, since they were not “doing business” within the meaning of the law.

An income of approximately twenty-five million dollars annually will be assured to the government by this decision.

[In 2011, Federal tax rates on corporate taxable income varied from 15% to 35%. In 2010, 6.6% ($138.2 billion) of Federal revenue came from corporations.]

Income Tax

The national income tax amendment to the national constitution, submitted by resolution of Congress in July, 1909, has been acted on favorably this year by nineteen legislatures, eleven states have thus far rejected it. Since the amendment must be approved by three-fourths of the states, nine more states are necessary for favorable action.

Since the constitution fixes no time limit to legislative action, the legislatures which rejected it this year may approve it next. Utah so far has not joined in favor of the proposed measure.

[On February 25, 1913, the amendment was ratified by the necessary three-fourths of the states, and became a part of the Constitution. On October 3, the Revenue Act of 1913 was enacted which re-imposed the Federal income tax. The Connecticut, Rhode Island, and Utah legislatures rejected the amendment. Florida, Pennsylvania, and Virginia never considered the amendment.]

Adapted from: “Passing Events”, Improvement Era, Vol. XIV. April, 1911. No. 6 and “Passing Events”, May, 1911. No. 7
Rickety signature.

Presidents on Government

Presidents Day

Flag
The federal holiday honoring George Washington began in 1880 in the District of Columbia and expanded in 1885 to include all of the Federal Government. It was celebrated on Washington’s birthday, February 22. In 1971 the holiday was shifted to the third Monday in February and as such never falls on Washington’s actual birthday.

In the 1980s the term “Presidents Day” began its public appearance. Although Lincoln’s birthday, February 12, was never a federal holiday, approximately a dozen state governments have officially renamed their Washington’s Birthday observances as “Presidents Day”, “Washington and Lincoln Day”, such as Utah, or other such designations.

Collected herein is a quote from each president about government. Do you have a favorite?

The Presidents Series

Rickety signature.

Paul on Politics: How to Reduce the Federal Deficit

My guest writer today on the Rickety blog is my Uncle Paul. We have been talking about the deficit and I present here some of Paul’s thoughts. He characterizes them as “musings” that are subject to discussion and not his final word.
Source: Summary Report of the 2007 Financial Report of the US Government.

Percentage Cuts

How to reduce the Federal deficit? Lopping off a percentage across the board is one strategy and used most of the time. I don’t prefer that type of approach because it may reduce programs that are performing for us. Moreover, when we make percentage cuts, the agencies simply cut the programs that hurt the electorate the most. Then there is a hue and cry until the public pressures legislators to restore the cuts or they pass a special levy to create a new program.

Paul’s maxim takes effect: “The demand for services rises to consume all available resources.” Programs came into effect one by one. Some do furnish services we need like law enforcement — not all law enforcement programs by the way should be kept. We can do without programs like D.A.R.E. as an example.

Reduce Unnecessary Services

Therefore, reducing unnecessary services dictates an examination of each program one by one to evaluate its efficacy. And, it dictates some honesty on our legislator’s part to deal with special interests. Of course, legislators are, for the most part, elected by special interests — teachers’ unions for instance. So it is up to the voters to remove ill performing legislators. Especially professional legislators. A big step in that direction would be to remove retirement benefits from the list of legislative benefits for elected officials. Our system of liberty demands citizen participants that rotate to refresh the body politic and intellect and who want to serve the public.

To evaluate efficacy, services need to be audited by an outside source who then reports to the legislature. Here in Washington, we passed an initiative from the people to create independent audits. The legislature had to be dragged by the heels screaming and kicking like some spoiled child. Some of us worked to promote independent audits for at least ten years. Results are promising but we need more time to evaluate how it is working.

Agency Function

One year, the Republicans in the legislature, in concert with a Democratic Governor (Gary Locke), approached the problem by forcing every agency to list their functions in terms of the agency priority. Then the Governor lopped off the lowest valued programs until his budget goals were met. That worked marginally O.K. but we are still left with the fact that agencies protect themselves first which doesn’t mean the public is necessarily served well by their evaluation.

If I were the legislature, I would cause the agencies to compete for funding instead of colluding to run up all their programs. When an agency must justify itself to survive, we get more information to work with in deciding which program is performing, intended, and worth funding.