Making Amends

It's time to explore another example of the U.S. Constitution affecting Americans' everyday lives...

Detail from "The Rectangle" by Frank O. King, in Chicago Tribune, February 16, 1919

But — surprise! I'm not talking about the Eighteenth Amendment today, but the Sixteenth.

"The Coming Serenade" by Sidney Greene in New York Evening Telegram, ca. January, 1919

In a way, the 16th Amendment establishing the federal income tax was necessary for the passage of the 18th, since the federal government was going to need to replace the revenue from taxes levied on alcohol. The federal government had also been heavily reliant on tariffs, which progressives denounced as overburdening lower income groups — since the poor spend a greater percentage of their income than rich people do.

Although tariffs were blamed for inflation, they had the benefit of being a hidden tax, collected a little at a time within the price of goods. The income tax, on the other hand, was initially collected all at once on March 15; payroll deduction wouldn't come around until World War II.

So kwitcherbitchin about how small your refund is this year. That refund is your interest-free loan to Uncle Sam. Your great-great-grandpa not only didn't get a refund, he had better have saved up enough throughout the year to satisfy IRS expectations.

"Guess Who!" by Wm. C. Morris for George Matthew Adams Service, February, 1919

When the federal income tax was first levied in 1913, the tax rate was a modest 1% tax on net personal incomes above $3,000, with a 6% surtax on incomes above $500,000. Since the Liberty Loans had fallen well short of their goals to fund military readiness for and participation in World War I, Congress raised the top income tax rate for 1918 to 77% on income over $1,000,000 (the equivalent of about $17,000,000 today). The effective average rate for the rich, however, was only 15%.

Form 1040 in 1916.

As for the typical filer, single persons with income in 1918 of over $1,000, and married persons with income over $2,000 were required to file income tax returns. That first one or two thousand bucks were exempted from income, and there was a $200 exemption for each dependent in a household. New in 1918 was the complication that if one was married only half of the year, one was limited to only half of the marital exemption.

Interest on the purchase of Liberty Bonds was also exempt, but interest paid on loans for the purchase of those bonds was not deductible. In all, federal tax law took up a few hundred pages, compared to over 72,000 pages nowadays.

"Interment Public" by Cyrus Hungerford in Pittsburgh Sun, ca. March, 1919

If Cy Hungerford's take on taxation hackneyed and shopworn, here's one from Nelson Harding from a totally different point of view from all the other cartoonists on this page.

"Swamped!" by Nelson Harding in Brooklyn Daily Eagle, March 18, 1919

Finally, lets circle back 'round to Frank King, who offered several ideas for repurposing all those soon-to-be unemployed bar rails by installing them in other establishments. They might even, he suggested, turn paying taxes into an enjoyable social activity.

Detail from "The Rectangle" by Frank O. King in Chicago Tribune, March 2, 1919

Because that's why folks went out drinking in those days. So a guy could put one foot up.

Oh, heck, as long as we're back on the subject of Prohibition anyway, here's John McCutcheon anticipating a lot of folks making a run for the border once the United States' taps ran dry.

"When the U.S. Goes Dry" by John McCutcheon in Chicago Tribune, March 10, 1919

Mexico must have been sorely tempted to build a wall to keep out all the drunken gringos.