BEWARE THE IDES OF APRIL - a Brief History of Taxation

By Edwin D. Reilly, Jr.

For The Sunday Gazette

 

 

And the Pharisees asked of Him: “Is it lawful to give tribute to Caesar?”
But Jesus perceived their wickedness, and said, “Why do you tempt me, you hypocrites?
Show me the tribute money.” And they brought unto Him a denarius.
And  He said to them, “Whose is this image and inscription?,” and they said “Caesar’s”
Then He said, “Render therefore unto Caesar the things that are Caesar's, and unto God the things that are God's.”

                                   -Matthew 22:17-21

 

Beware the Ides of April.

                                  -Anonymous Freudian slip

 

       A thousand years ago, whenever my children were about to take a bite of a cookie or a Hershey bar, I would say just one word: “Tax!” And they would smile and hand over a smidgeon or a square or two. Now, don’t think I was trying to educate them as to the virtues of paying taxes as the price of civilization. I just wanted the candy.

       Because today is Sunday and tomorrow is Patriots’ Day in Massachusetts where we file, we have until midnight Tuesday to mail our federal and state returns. Well, I suppose those who expect a refund have already done so.


        The concept of a tax refund reminds me of the funniest episode of the late 1960s TV show “Green Acres.” In its fifth year, 1969—the annus mirabilis in which we landed a man on the moon, the year the Mets won the World Series, the year the first Democrat was elected in the 160-year history of Niskayuna—Oliver Wendell Douglas, a.k.a. Eddie Albert, files for and receives an $84 refund. (Google knows everything.)

      Even though Oliver was the only one in town to have earned one, the jealous farmers of Hootersville, wanting one too, add up their losses for the prior ten years and file for a refund. Lo and behold, the IRS computer that examines the claims blows a gasket, ignores the lack of filed 1040 forms, and rebates a collective half million or so to the protestants (regardless of their religion). So the IRS sends an agent to town to try to get its money back by investing in a monkey racing track.

       The earliest recorded system of taxation dates to about 3000-2800 BC in Ancient Egypt. The Pharaoh would conduct a biannual tour of the kingdom and collect tribute from his people. Even the tax rate is known;  in Genesis 47:24, Joseph tells the people of Egypt to give 20% of each crop to the Pharaoh. And in later books of the bible, the standard rate for giving to synagogues and churches was set at 10%—a tenth or “tithe.”

      Some countries, even ours for a time, levied a poll tax per capita, that is, by the head. But Tsarist Russia imposed a tax on beards. (So much per whisker?) In the middle ages, some European principalities suddenly began to assess taxes on homes in proportion to the number of windows and doors they contained. Needless to say, the sight of boarded up windows quickly failed to be a sign of an abandoned building. And, to this day, some cities impose water “rents” (they are usage charges, not taxes) based on the number of faucets in the home rather than taking the long view and investing in water meters.

     Modern tax rates vary widely, country to country, state to state, town to town, school district to school district. Some are applied to income, others to what you buy (sales tax), others to what you persist in owning (real estate taxes) even though you owned the very same property last year. To my mind, such a tax is most peculiar, but it does have the advantage (to government) of being virtually unavoidable. I say “virtually” because, according to a recent Gazette story, Rotterdam’s recent reval found that several properties had materialized out of thin air. These ghost parcels probably belong to a unit of government and hence would be tax-exempt, but if not, woe betide their owners who trusted in a “don’t ask, don’t tell” philosophy.

     According to Wikipedia, the three counties with the highest effective rate of taxation, defined as the ratio of all taxes collected to gross national product, are Sweden at 51%, Denmark at 50%, and Belgium at 45%. The lowest two are South Korea at 26% and Mexico at 20%. The United States, at 27%, is third lowest. But the libertarians think that that is 27% too high, and it is hard to convince Americans that they are lightly taxed.

     President Bush wants to make his tax cuts permanent. What he fears is that Congress will let certain provisions of the round of cuts of which he is most proud expire via the “sunset” provisions attached to them, and without which they would not have passed. To those who  despise inflationary national deficits that gradually degrade the value of ephemeral tax savings, this is a capital offense; it is being committed in the Capital and it is an offense against our language. No national tax can ever be “permanent”; all it takes to modify one is a willing Congress and a complicit President.

     But the silliest tax canard of all is the concept of Tax Freedom Day, developed and copyrighted in 1948 by Florida businessman Dallas Hostetler. This is allegedly the day of the year on which the average citizen has earned enough to pay all of the year’s taxes and can thus consider all income earned for the rest of the year as free and clear, to have and to hold. Nonsense.

     For one thing, if a worker (whose wages are subject to withholding) were to stop work as of Freedom Day, that person would earn a refund early the next year, effectively and retroactively moving his or her personal Freedom Day to some earlier month. And although the Tax Foundation that computes such days thinks that this year’s day, on average, is April 30—two weeks from tomorrow—they compute average tax obligations that are heavily weighted by the Gates and Buffets of the country rather using median obligations. Correcting for that would bring Tax Freedom Day to some time in late February for most of us.

     Regardless of their method, the Foundation numbers do give some indication as to which states impose the greatest and least tax burdens on their residents. With a freedom day of May 16, our burden in New York is second highest to Connecticut’s, whose day is four days later. Today, the Ides of April, is New Mexico’s day, just three days later than that of the state with the earliest day, Oklahoma, where “June is bustin’ out all over.” On their date, June 19, Canadians breathe a sigh of (tax) relief, even though the whole idea is a bust.

 

Edwin D. Reilly, Jr., who stopped taxing people in 1998, lives in Niskayuna and is a regular contributor to the Sunday Gazette opinion page.