17 March 2007
Work of the Cursing Class
I have driven out the snakes, and there is no snow for me to shovel on the driveway. That is the purview of the crack maintenance crew at Big Pink, and makes it a sort of half-way house on the way from the joys of home-ownership to assisted living.
A century ago the grounds crew would have been mostly Irish, but that is a quaint idea now. The only real Irish I have seen lately are the sleek ones with the gold chains who opened the Bobby Van's Steakhouse down on New York Avenue. Things appear to be going well back in the Emerald Isle, and why they are still coming here is a mystery to me.
I am a little concerned about the number of amateurs who will be out on the roads after hoisting a celebratory glass or two today, and this has become one of the those holidays in the year where I retreat to the Bunker and watch the bumper cars out on Route 50. The thin glaze o' ice will make it entertaining, and it is better to stay out of their way.
That will keep me away from the historic march on the Pentagon this morning, which in a new wrinkle is supposed to feature actual veterans and active duty troops marching from the Vietnam Memorial on the Mall to the Pentagon, following the route of the famous 1967 march.
There is something screwy about the whole thing, since all of us that served since that time signed up for whatever pickle the Government chose to put us in. I am going to stay away form the whole thing in protest, which is in my genes. Or jeans, as the case may be.
Matters of state had to take a backseat to the curse of Caesar this morning anyway. I love a Saturday morning in the snow. There are hours before I have to go back to work on whatever it is that I do, and there is a little project that needs to get off the table, so to speak.
I don't know where you do it, but I know that you do. There is a special place we all have, one of obligation and dread, hope and fear all rolled into one. Some use one of the sock-drawers back in the bedroom, since it is as intimate as it gets, and metaphorically it is used for exactly the same purpose. I blame Milton Friedman , which is a more unsettling image than I can handle this early in the morning.
I use the little secretary desk next to the kitchen. It has a folding top, and I just put things in it all year long. This is the morning that I open it and let the mysteries out, since the big riddle of Spring has to be unraveled, and I am not talking about March Madness.
When I retired from the secret world there was a bracing moment at tax time when I rejoined the reality of the average citizen. There is a lot of sacrifice in government service, but there are also a few small perks. Some of the benefits for housing and insurance fly under the radar of the taxman, and I am relieved that I do not have to pay Federal tax on the liquor I purchase on base. Confronting the full tax liability all at once is a little breathtaking, since the modest pension on top of a civilian paycheck requires extra withholding that no one remembers to do. There is a big bill that comes the first April after retirement.
It was seductive. I got used to having the money I earned, thinking it was mine because I earned it. Having to give it all back at once is quite a shock.
If there were no withholding tax, and we paid our tax bill as a lump sum each year, there would be rioting in the streets, and another civil war.
The right of the taxman to stand in the payroll office and take a slice of your paycheck is another of those things that started with a perfectly sincere set of lies.
We don't remember how Franklin Roosevelt justified the Social Security system, so with the system just about to implode under the weight of the Boomers, it is refreshing to recall the promises:
"Participation in the Program will be completely voluntary; Participants will only have to pay 1% of the first $1,400 of their annual incomes into the Program; Contributions put into the Program will be deductible from income at tax time each year; the money will be put into the independent "Trust Fund" rather than into the General operating fund, and will only be used to fund the Social Security Retirement Program, and annuity payments to the retirees will never be taxed as income."
Lies and balderdash, each one of them. But once the camel has his nose in the tent, it is hard to get him out again.
It was the same thing with the 16th amendment to the Constitution, the one that established the Income Tax. Until ratification of the amendment, all direct taxes were required to be levied in proportion among the states according to population, per Article I, section 2, clause 3 and Article I, section 9, clause 4 of the Constitution.
It is a fine document, filled with warnings about the foibles of politicians and human nature. It is vulnerable, though, being only parchment, and subject to interpretation by each new generation.
Prior to 1895, all "income taxes" were considered to be excises (indirect taxes) required to be imposed with geographical uniformity.
The ostentatiously displayed wealth of the Robber Barons was an affront to public decency, though. An attempt was made in 1894 to impose a federal tax of 2% on incomes over $3,000, which was a lordly sum in the Gilded Age. Opponents claimed it was "communistic," but it had a certain resonance in the population at large. The notion of the Federal Income Tax had the same sort of cachet as the Alternate Minimum Tax of recent years, or a soak-the-rich scheme that is immensely popular right up to the moment that people wake up and realize it was never indexed to the cost of living, and since we are all "rich" now, we are all victims.
But c'est la vie. In 1913, very few people paid any federal taxes, and did not affect most citizens until World War II. Those that owed taxes paid them in one lump sum on March 15 (later changed to our national mourning day of April 15). To pay for the war, the Revenue Act of 1942 lowered exemptions and raised income tax rates.
It also contained something much more insidious than the Alternate Minimum Tax. It was a 5 percent "Victory Tax" on all wages above a standard exemption of $624. In view of how massively expensive the war effort was going to be, there needed to be a means were to harvest the tax before it got into the pay envelope. It would be deducted a priori by the employer from the employee's paycheck-just like the "voluntary" Social Security tax that began in 1935.
We can thank brilliant economist and mathematician Milton Friedman for the whole concept. Milton was a bright young thing who joined the Treasury Department in 1940, and was at least twice as smart as he needed to be when he invented the Victory Tax. Before World War II, there was no withholding system and everyone gulped and paid their annual bill in one lump sum.
No one was cursing. There were eight million young people in uniform, and Hitler and Tojo were at the door. Extraordinary times call for extraordinary measures, right?
Flush with success and looking at the most expensive undertaking in the history of the world, Congress passed the Current Tax Payment Act of 1943, which made the withholding for the Victory Tax universal for all Federal assessments. By the end of the war, three-quarters of all taxpayers were paying federal income taxes. The withholding tax was sold as a wartime emergency measure, and I assume that once we pay off World War II it will go away, right?
I just ran the numbers for 2006 through my TurboTax program on the computer. It is pretty slick these days, just poke in a few numbers and off it goes to the IRS electronically. I remember cursing my way through the forms just a few years ago, calculator in hand, sweating through the rough-and-final drafts. It is as automated as the Victory Tax now, and you barely have to think at all about the amount of money that has already been taken away from you. Hardly work at all. After all, we do a lot better than most other countries that run welfare states. Or perhaps we just have not reached the same brink yet.
I was pretty excited to find that this year I am going to get a pittance back. As a coincidence, it is just about enough to pay my younger son's debt to the IRS, since his employer failed to take withholding out of his check, classifying his 21-year-old college butt as a "private contractor," as if he was the Lockheed-Martin Corporation directing buses in the parking lot.
He was justly horrified when he found out how much he owed Uncle Sam, and only by shifting the burden to me will he stay clear of disaster and ruin.
Milton Friedman made possible the great victory of World War Two with the Victory Tax, and all else that has come since. But is one of those crazy things. If we got to vote on it, would we have chosen to let the taxman stay in the payroll office? Would we have chosen to be the Sole Remaining Superpower, lathering ourselves in the sweet butter of benefits and entitlements along with the guns?
Or would we perhaps have chosen something different than debt for our kids?
Copyright 2007 Vic Socotra
www.vicsocotra.com