CELEBRATING 100 YEARS OF INCOME TAX
Yup, you read that
right: Celebrating!
The Federal Income Tax
as we know it has its 100th birthday this month. The origin
of the modern day income tax on individuals is generally cited as the passage
of the 16th Amendment, passed by Congress on July 2, 1909, and ratified in February
of 1913.
|
The New Man on the Job
Artist:John Scott Clubb
Date: 1913 |
With precious few fans of the tax (especially in our
nation’s capital) there are not likely to be many candle-covered cakes and
parties.
But I’ll be
celebrating -- for a slightly curious reason.
And maybe you can,
too. The Income Tax Centennial provides me with a timely “hook” for sharing
(once again for anyone who knows me even moderately well) one of my favorite
Life Lessons.
In fact, I’ve told and retold, repurposed, e-blasted, blogged
and whatever the core story I’ll be sharing today many, many times before. So I
apologize in advance if you find it old news dressed in a new outfit for this
Centennial Party.
- But even if I’ve accosted
you with it before, please read on. I hope you find “tickler” value in its
repetition and maybe new insight for dealing with all manner of challenges
in today’s economic conditions. Thanks for your patience in reviewing it
again.
- If it turns out to be a
new item for you, I hope you can take it to heart and use it to make these
“taxing” times easier to weather.
Here’s the 100th Birthday version, starting with
--
Some basic info:
As you may have noted by now, I like acronyms, TGIM... FYI…
BYE...
DREAMS… JDS.
Certainly they serve as convenient "shorthand."
But they are also a powerful and valuable tool for reinforcing important
concepts and bringing the full force of the underlying principles quickly to
mind.
So, although it’s a centennial birthday for the dread
acronym IRS, that leads my thinking to the origins of perhaps the most
important acronym in my mind –
EHFTB
EHFTB stands for –
Everything
Happens For The Best
Here's the tax time
story behind it: Richard Prentice Ettinger, the co-founder of the
publishing giant Prentice-Hall, discovered EHFTB as he started in business as a
publisher.
In the earliest days of the company, the pages for his
second book, about the new-in-1913 Federal Income Tax Law, had just come off
the press.
However:
Congress, then as now, couldn’t settle and fiddled about with ongoing
last-minute changes in the law.
This made many of the already-printed pages inaccurate.
Stuck with a huge printing bill and pages of worthlessly incorrect information,
it appeared the new publishing enterprise was doomed.
But RPE, as he was known (more initials), thought hard about what he HAD.
He realized many of the pages were NOT adversely affected.
Snatching victory
from the jaws of defeat. He concluded that he could salvage the unaffected
pages … print some new, correct pages ... punch holes in the whole batch ...
and put them all together in a loose-leaf binder.
Bonus payoff: He
could sell not just one book but also sell replacement pages on a continuing
basis as the Tax Law continued to evolve.
That was in 1913.
The forward-thinking author of Brave New
World, Aldous Huxley, noted at the time that Ettinger had done with the
loose-leaf page something equivalent to what Guttenberg had done with moveable
type.
Such subscription publishing became a cornerstone of a
highly successful enterprise; proof indeed that EHFTB -- Everything Happens For The Best.
“A nice, but slightly Pollyanna-ish, sentiment,” you say?
Wait! There's more.
In fact, the “more” is, perhaps, the most important part.
Richard Neill, RPE’s protégé who was entrusted with the
ongoing publication of that first tax tome, passed along this history lesson
for many years.
(I was a Dick Neill protégé and was fortunate enough to have
also known RPE. And yes, he was referred to as RN and I was GS.)
But in the telling and reminding, RN added the crucial
element that makes the difference between an interesting bit of business
history and –
-- a principle which any of us
can take to heart and apply
TGIM ACTION IDEA: When appropriate, and especially if some
problem needed confronting or remedying, Richard Neill would annotate the
margin of a memo or report with a handwritten reminder -- EHFTB.
And under those initials he would write –
FTWMIH
The importance of this second thought, and the principle
behind the phrase these letters represent, is THE KEY to making EHFTB work.
Richard Neill's FTWMIH reminder is that –
Everything Happens For The Best
For
Those Who Make It Happen
TGIM IDEA IN ACTION: You must take action for anything to turn out “for the best.” You must be
ever alert for opportunities to triumph in the face of adversity.
And it’s not easy. You
can’t be a passive bystander. You must be constantly and consistently preparing
for the future. And when challenges arise you must rally that preparation and
confront them.
It isn’t enough to
want the best. Continually challenge yourself to know what you’re going to
do to get to where you want to be. Effort makes achievement.
Make the effort.
Make it happen – for the best.
Then celebrate along with me.
Geoff Steck
Chief Catalyst
Alexander Publishing & Marketing
8 Depot Square
P.S. Return with us now to those taxing times of
yesteryear: Here’s a thumbnail earliest-days-of-the-Federal-Income-Tax time
line.
1909 - President
Taft recommended Congress propose a constitutional amendment that would give
the government the power to tax incomes without apportioning the burden among
the states in line with population. Congress also levied a 1 percent tax on net
corporate incomes of more than $5,000.
|
The first Form 1040 -- 1913 |
1913 - As the
threat of what would be known as the First World War loomed, Wyoming became the
36th and last state needed to ratify the 16th Amendment. The Amendment stated,
"Congress shall have the power to lay and collect taxes on incomes, from
whatever source derived, without apportionment among the several states, and
without regard to any census or enumeration." Later, Congress adopted a 1
percent tax on net personal income of more than $3,000 with a surtax of 6
percent on incomes of more than $500,000. It also repealed the 1909 corporate
income tax. The first Form 1040 was introduced.
1918 - The Revenue Act of 1918 raised even greater
sums for the World War I effort. It codified all existing tax laws and imposed
a progressive income-tax rate structure of up to 77 percent. (For 2013 the top
marginal rate is 39.6%.)
"Taxes are what
we pay for civilized society.'' —
U.S. Supreme Court Justice Oliver Wendell Holmes, Jr. (1841-1935) said that.