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Letter to Jean-Baptiste Leroy from Benjamin Franklin [November 13, 1789]

Boy, this is intimidating! Usually I edit or add a paragraph here and there. This time I'm doing a whole section! Who knows, I may like this and take over...someday I may take over the world! Oops, let's not get too full of ourselves! Let's just talk about taxes.

At this time of year everyone starts to get a little crazy worrying about taxes. Well, don't feel all alone. Temporary insanity because of taxes goes way back. I'm sure you have all heard the legend of Lady Godiva riding through the streets of Coventry naked. Well, do you know why she did it? TAXES! Yes, it's true. According to the legend, Lady Godiva's husband promised to reduce the high taxes he levied on the residents of Coventry when she rode naked through the streets of the town. (I'm sure he said that in the same spirit that we say "When h--- freezes over" knowing full well that will never happen!) But she fooled him. She did it!

And of course, Americans don't have a monopoly on taxation. There are records of taxation all the way back to the Roman Empire. The Romans imposed a head tax on every individual in Roman Society. Julius Caesar even got in on the fun by creating a 1% sales tax!

Taxes in Great Britain even go back to the same time period as the Roman Empire occupation. And taxing bodies can't seem to make up their minds whether to tax the rich or the poor. In 14th century England, the taxes were very progressive. The 1377 Poll tax records show that the Duke of Lancaster was taxed at a rate 520 time the rate of the common peasant. How many of you would like to be taxed at 1/520th the rate of some of the more wealthy folks in America? I saw you raise your hand!

But by the mid 1600's, things had turned around. Parliament imposed excise taxes on essential commodities such as grain and meat at a rate that the average family of four would starve. In fact the rates were so excessive that the citizens of Smithfield rioted! In addition to these taxes, the common land that was used for hunting by the peasants were fenced off so the peasants lost virtually their only source of meat. The poor did have their champions, though. Can you say "Robin Hood!"

On to Income Taxes! The first income tax was suggested in America around the time of the War of 1812. The original reason for the tax was to create revenue to aid in fighting the war. By the time the tax was developed in 1814 we were really close to signing the Treaty of Ghent which ended the hostilities, so there was no need for the tax revenue. Can you imagine that? Because we didn't need the money, they didn't tax us! That would never happen today. Congress would invent a need for revenue just so they could impose the tax! Well, maybe that's a little cynical, but sometimes it seems that way.

Well, then along came the Civil War and the Tax Act of 1862 was passed by Congress and signed by President Lincoln. The tax rates were 3% on income over $600 and 5% on income over $10,000. According to history, the people cheerfully accepted the tax. Well, maybe they SAID they accepted it, but compliance was not real high. (It seems there were even tax dodgers in 1870!) Figures released after the Civil War show that only 276,661 people actually filed a tax return. This was at a time when the population was approximately 38,000,000!

In 1864 another Tax Act was passed that raised the tax rates. For income of $600 to $5,000 the rate was 5%. It was 7% for income of $5,001 to $10,000 and 10% on income over $10,000. At the end of the Civil War, the cheerful acceptance of the tax began to drop off. The Tax Act of 1864 was modified and we had a flat tax. Yes, as far back as the late 1800's we actually had a flat tax! The rate was 5%. And from 1870 to 1872 the rate was a flat 2.5%. Of course, that didn't last and the tax was repealed in 1872. We've gone through several tax changes since then and anyone who can keep track of them is a certifiable genius!!!!!

One interesting note, though, concerning taxes as a percentage of the elusive GNP (gross national product). In the 1930's taxes from individuals were never more than 1.4% of the GNP and taxes on corporations were never more than 1.6% of GNP. Seems to be pretty even. I could live with that. But moving forward to 1990, the gap seems to widen. In 1990 taxes from individuals was up to 8.77% of GNP, but corporate taxes were still only 1.99%. Not quite as equitable, is it?

And still on a bit of an historical note, we found a site that you might find interesting. Of course, you know that your tax return is confidential. However, some of our more recent Presidents have voluntarily released their returns. To see these returns, visit "Presidential Tax Returns." Even if you aren't interested in how much President Roosevelt made in 1937, it is really interesting to see the evolution of the 1040.

There are jillions of sites that can give you information on taxes. One of the most helpful, believe it or not, is the IRS site. About the only confusing thing about this site is that is isn't real clear on how to get started in navigating around this site. It's really very simple, just click on the mailbox. You can pull down current IRS forms, find out how to file your taxes electronically and even about employment opportunities with the IRS.

If you'd like more information on great tax sites, feel free to attend the StarSIG at the Rodeo Steakhouse on March 28, 1998 at 10:00 in the morning. Just promise not to laugh at me. This will be my first StarSIG presentation!

Now I have to give the keyboard back to Chuck! He'll give you another dose of Net Humor! Click on the right arrow and get ready to "chuck"le!

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