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THE CITY TAXING TIMES

Beware the Ides of April
By Mamta Chaudhry-Fryer |

“APRIL IS THE cruelest month, ” mourns T. S. Eliot in his famous poem The Waste Land. Most Americans, preparing once again for that peculiar rite of spring known as Income Tax Day, readily agree.

This is one day that the greeting card industry, which avidly investigates and even invents occasions to mark, has left alone. It is highly unlikely that you’ll ever receive an Income Tax Day greeting card inscribed “Many Happy RETURNS!”

That’s probably because for most people caught between the Scylla of inflation and the Charybdis of taxation, April 15th is no laughing matter. Almost everyone hates paying taxes.

One -and, as far as we can tell, the only – notable exception is Justice Oliver Wendell Holmes, who insisted that he liked to pay taxes because “taxes are the price we pay for civilization. ” A lawyer friend, wrestling with his return, remarked darkly, “If I didn’t have any more to pay than Mr. Holmes, I’d like paying taxes, too. “

When this taxing time of year rolls around, many of us tend to feel we have bought enough civilization for our lifetime. Others, in former-President Franklin D. Roosevelt’s words, “want the civilization at a discount. ” Better yet, for free.

But, as J. Samuel Bois tells us crisply in The Art of Awareness, “no amount of wishful thinking will ever bring us back to pre-income tax days. ” And Benjamin Franklin, long before that, wrote with deep conviction, “In this world, nothing is certain but death and taxes. ” Unfortunately, they don’t occur in that order, so while we live, we file.

Last year, Americans filed 93, 143,000 returns, 5,661,236 of which were from Texas. According to the IRS, 23,165 agents were engaged in audit examinations. Never has so much been owed by so many to so few. But take heart -74.5 million refunds were mailed last year.

This year, an estimated 96 million returns will be filed, says the IRS, and roughly one-fifth of those will be in the last week before the deadline. For some people, this is due to chronic procrastination. For others, it’s the hope that their return will be buried in the avalanche of paper and will stand less chance of being plucked out for uncomfortably close scrutiny. For them, filing has become almost a science.

“The art of taxation, ” proclaimed Jean Baptiste Colbert, Louis XIV’s controller-general of finance, “consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing. ” The Internal Revenue Service’s task is made a lot easier by people who like to hiss and tell. This volunteer tax force – motivated by spite, envy, a sense of civic duty or a candid eye on the cash reward – reports people who cheat on taxes. Last year, 5, 000 such bounty hunters contacted the IRS. Only 472 were given cash rewards because they had information that could be substantiated. Their tips netted the IRS $14 million that would otherwise have slipped through its fingers. The reward money totaled $399, 000. Rewards, in case you were wondering, are taxable income.

In the South, memories of the Civil War die hard, and on April 15th we can look back in angst and remember it as the war that brought the country its first income tax. In the 10 years of its existence, the income tax yielded a total of $376, 000, 000 and was allowed to lapse in 1872.

In 1799, England had adopted the income tax to finance the Napoleonic Wars; the law was repealed in 1816. The germ of the infectious income tax, however, lies in medieval European history, in the personal tax that was levied upon artisans and others whose earnings came from services and skills rather than from property.

Back in the United States, the income tax reared its head once more in 1894 and was struck down as unconstitutional the next year. Eighteen years later, the 16th Amendment was adopted, providing Congress with the power to tax incomes from whatever source derived, without apportionment among the states. The income tax was here to stay.

In its early years, the tax deadline was in March, and taxpayers then used to bewail the Ides of March. In 1953, the due date was extended to April 15th, and around this day many a patriotic American starts feeling bled white and blue.

At this time of year, people start hurling imprecations on the hapless head of the IRS. These people’s ire, although understandable, is misdirected. After all, it is Congress that makes the tax laws. The IRS is simply responsible for carrying out the intent of Congress, difficult though that may be for mere mortals to discern.

The wrath of the taxpayer should be directed at Congress, and probably will be now that its members have generously given themselves more tax-free living expenses while Congress is in session. If this trend continues, the historic battle cry of “no taxation without representation” may well be changed to “no representation without taxation. “

The most unkind cut of all, however, is probably contained in the declaration made by the Committee on Ways and Means when it recommended the bill to the House in 1913: “Those citizens required to do so can well afford to devote a brief time during some one day in each year to the making out of a personal return . . . willingly and cheerfully. ” Even if one could conceive of filing one’s return willingly and cheerfully, the mind boggles at the masterly understatement in “a brief time during some one day each year.”

Specters of canceled checks, receipts so carefully stashed that they can’t be found, deductions so brilliant that Sherlock Holmes would applaud, instructions so long and laborious that you forget the beginning before you reach the end -all haunt the average taxpayer. He plaintively echoes Thoreau’s cry -“Simplify, simplify. ” That’s the long and short of it.

Neither the form nor the content of income tax has ever enjoyed widespread popularity. Ward McAllister, acknowledged leader of society at the end of the 19th century, threatened to leave the country if the income tax was levied. This prompted William Jennings Bryan to fire back, “Of all the mean men I have ever known, I have never known one so mean that I would be willing to say of him that his patriotism was less than two percent deep… If some of our ’best people’ prefer to leave the country rather than pay a tax of two percent, God pity the worst… “

In the intervening years, taxation has escalated at a dizzying rate and has indeed caused some of the best people to leave their countries. The most publicized case is probably that of Swedish film maker Ingmar Bergman, who left his native Sweden voicing cries and whispers of tax harassment.

He is not alone. High taxation in England also resulted in a drain of disillusioned talent, including actors Richard Burton, Sean Connery, Roger Moore, ex-Beatle Ringo Starr, Rolling Stones pianist John Ogdon and composer Sir William Walton.

Christopher Morley provides a lighter look at the artistic temperament and the English income tax: When an offer of knighthood came to Joseph Conrad in its long, blue official envelope marked “On His Majesty’s Secret Service, ” it lay unopened on Conrad’s desk for several weeks. Finally, the prime minister sent a messenger to find out what had happened. Then the truth came out – Conrad had not dared to open the envelope. He thought it was the income tax.

To many Britons, their high income tax seems a form of capital punishment. Perhaps it’s time for the British Parliament to recall Edmund Burke’s warning in the speech opposing taxation of the colonies: “To tax and to please, no more than to love and be wise, is not given to men. “

English author Frederick Forsyth (Day of the Jackal) immigrated to neighboring Ireland, a tax haven for creative artists. In the name of a Celtic revival, bona fide resident writers, artists and composers, both Irish and foreign, pay no income tax at all.

Try not to turn that delicate shade of green. This should help -individuals in the United States carry a far lighter tax load than most people around the world, according to the latest figures released by the Organization for Economic Cooperation and Development.

The country that has the most confis-catory taxation is Norway, where, believe it or not, some citizens have to pay more than 100 percent of their taxable income. According to the latest edition of The Guinness Book of World Records, shipping magnate Hilmar Reksten was assessed at 491 percent. At the other end of the spectrum, the lowest income tax in the world is paid by, among others, the citizens of Bahrain, Qatar and Kuwait, where the rate, regardless of income, is zero. Kuwait, incidentally, is also the richest country in the world, measured by gross national product per head.

Speaking of the richest country, that is how the IRS tends to regard America: the land of untold wealth. One is reminded of J. P. Morgan’s pithy observation, “If the government cannot collect its taxes, a man is a fool to pay them. ” And we all know what happens to a fool and his money.

Those artful dodgers who don’t want to part with their money without a struggle are skilled practitioners of tax avoidance and tax evasion. The terms are often used interchangeably, but while the former is legal, the latter is not. Lady Godiva’s famous ride, for example, was an act of tax avoidance undertaken on behalf of the people of Coventry. Tax evasion, on the other hand, is a less revealing act. Notorious criminals who eluded the long arm of the law were successfully brought to book on tax charges. The most spectacular instance of this is probably the story of “Scarface” Al Capone, the Chicago gangster who got away with machine guns and murder, but came to grief because he failed to file his Form 1040. Who says you can’t be wounded by a blank?

Those of us who have filed our returns can now lick our wounds and go back to our unsheltered lives, deep in the heart of Texas. Not for us, Time magazine’s blithe description: “Confounding the tax man is one of the world’s most popular unsung sports. It is usually played in the spring, and like polo, it is excelled at by the very rich. ” Somehow, that seems to deepen the hurt of taxes.

But don’t let April 15th get you down. Rise above it. Remember, you owe it to yourself to succeed in life. And when you are successful, you owe it to the IRS.

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