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Fun Tax Facts

Can anything about taxes ever be fun?! We honestly think this is interesting stuff. Happy April 15th!


No Income Taxes!

For more than the first half of our nation’s existence, the U.S. Government managed to do without an income tax (except briefly during and immediately after the Civil War). Customs duties and the sale of public lands were the main sources of federal revenue.

Supreme Court Said Income Tax Was Unconstitutional

Within months after the first peacetime income tax became law in 1894, the U.S. Supreme Court invalidated it as unconstitutional. Pollock v. Farmers’ Loan & Trust Co., 158 U.S. 161.

Happy 100-Year Anniversary

That Supreme Court decision itself was in effect overturned in 1913 when the Sixteenth Amendment was ratified. It gave Congress the “power to lay and collect taxes on incomes, from whatever source derived.”

The First Permanent Income Tax

Congress didn’t waste any time. Before that year was out, The Revenue Act of 1913 codified an income tax. Its tax rate was a “normal tax of 1 per cent” on income over $3,000 (over $4,000 for married couples), plus a “super tax” on incomes above $20,000, ranging from an additional 1% to as much as an additional 6% on income over $500,000. About one out of every 271 people was taxed under this law in its first year.

The First Form 1040

The complete income tax return for 1913, including all income and deduction “schedules,” along with the complete tax table, was only 3 pages long. From the beginning it was called Form 1040. The entire instructions fit on a single page! Here’s that original Form 1040, with the instructions.

Earlier Due Date, Short Extension

The first 1040s were due on March 1, 1914, with the possibility of only a 30-day extension. Extensions were to be granted only for sickness or absence from the United States.

From 0 to 60 in Just a Few Years

Because of a severe reduction in revenues from traditional sources—especially custom duties—and much greater financial needs of the federal government during World War I and the Great Depression, the income tax quickly became its largest source of revenue. By 1930, the income tax was the source of 60% of federal revenues. It reached the high point during World War II to nearly 80% of revenues, but declined after the war. From the 1980s through to the present, income tax has been the source for 50% to 60% of federal revenues.

The President’s Tax Return

Here’s Barack and Michelle Obama’s just-released 2012 IRS and Illinois tax returns and attachments, all 38 pages, complete with their signatures. It includes an itemization of the 33 charities to which they donated a total of about $150,000 (see pp. 23-24).

Other Presidents’, Vice-Presidents’, and Candidates’ Tax Returns

Here are many other interesting tax returns from select years, including, among others, those of Mitt Romney, Sarah Palin, George W. Bush, Bill Clinton, Ronald Reagan, Richard Nixon, and even Franklin D. Roosevelt.  For example:

  • Todd and Sarah Palin’s 2007 tax return, prepared through H&R Block, showed a tax deductible loss of almost $10,000 from Todd’s snowmobile racing business.
  • Richard and Patricia Nixon’s 1969 tax return included a charitable deduction of $576,000 for a gift to the federal General Services Administration of his “Personal papers, manuscripts and other materials” totaling 1,176 boxes, together with an appraisal. Wonder if it included any audiotapes?!
  • Franklin D. Roosevelt’s 1937 tax return is accompanied by a cover letter from him to “My dear Commissioner Helvering,” the Commissioner of the IRS, saying “I am wholly unable to figure out the amount of the tax…   .” He goes on to explain that there was one tax rate effective during the first 20 days of January when he was in his first Presidential term, and then a different rate during the rest of the year during his second term. He concluded: “As this is a problem of higher mathematics, may I ask that the Bureau [of Internal Revenue] let me know the amount of the balance due?”

Amazing! FDR had spent the last 4 years trying to transform the national economy and rescue it from the Great Depression, but has to ask the IRS to do the math to figure out what he owes! Sounds familiar.

And for any of you last-minute filers, can you guess the date of this letter? Yes, it’s dated the very last day to send in the tax returns (back then March 15, 1938)! Now do you feel better?! 

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