50 Fun Facts About Income Tax

Which Disney character starred in The New Spirit, a 1942 cartoon urging Americans to pay their income tax?

Donald Duck starred in the short, which Treasury Secretary Henry Morgenthau Jr. commissioned from Walt Disney to back the war effort. It earned an Academy Award nomination for Best Documentary.

Which conflict prompted the first US federal income tax, a flat 3 percent levy on incomes above $800?

The American Civil War left Washington short of money, so Abraham Lincoln signed the tax in August 1861. A year later Congress swapped the flat rate for a graduated scale.

Which gangster's 1931 income tax conviction followed a 1927 ruling that illegally earned money can be taxed?

Al Capone drew eleven years in federal prison. Prosecutor Mabel Walker Willebrandt had first tried her theory on a South Carolina bootlegger, who argued that declaring criminal income would incriminate him.

Richard Hatch went to prison for failing to report the $1 million he won on which reality show's debut season?

Survivor crowned Richard Hatch its first winner in 2000, and a jury convicted him on tax charges in 2006. He served fifty-one months, then nine more for failing to amend his returns.

Which board game long made players landing on Income Tax choose between paying $200 or ten percent of their holdings?

Monopoly dropped the choice in 2008, when the US edition moved to a flat $200. Under the old rule players had to decide before they were allowed to add up what they owned.

Which tax preparation company, founded in Kansas City in 1955, changed the spelling of its founders' surname?

H&R Block was started by brothers Henry and Richard Bloch, who ended the name with a K so that nobody would say blotch. Their first newspaper ad offered tax help for $5.

Which state scrapped its individual income tax and pays residents a yearly dividend drawn from oil revenues instead?

Alaska dropped the tax at the start of the 1980s. Its Permanent Fund Dividend goes to people who have lived there for a full calendar year, and the payment itself is subject to federal income tax.

Seven million of which people vanished from US tax returns once a 1986 law required a Social Security number for each?

Dependents fell by seven million in the first year, because many of the children being claimed had never existed. Others had been claimed by parents who did not have custody.

Which Swedish children's author wrote a 1976 newspaper satire after her marginal tax rate reached 102 percent?

Astrid Lindgren answered with a fairy tale, Pomperipossa in Monismania, printed in the paper Expressen. The row was one of several blamed when the Social Democrats lost power that year after 44 years.

A 2016 law spared most American winners of which prizes from federal income tax on their value and bonus money?

Olympic medals and the cash bonuses that come with them stopped counting as income for winners earning under $1 million a year. Paralympic medals are covered as well.

Which amendment, ratified in 1913, reversed an 1895 Supreme Court ruling so Congress could tax incomes directly?

The Sixteenth Amendment went to the states in July 1909 and took until February 1913 to win enough of them. It was proposed partly to defuse calls for new taxes in a tariff bill.

Which president signed the 1913 law that brought back the federal income tax, set at 1 percent on income above $3,000?

Woodrow Wilson signed the act that October, and its income tax touched only about three percent of the population. The same law sharply cut tariffs, his first priority on taking office.

Which number was given to the main US individual income tax return in 1913 simply because it came next in the sequence?

1040 was just the next free number on the government's list of forms, and the first version ran to three pages. Around 350,000 were filed in 1914, and every one was audited.

Which form does a new US employee hand the employer to set paycheck withholding, one the IRS rarely ever sees?

W-4 forms stay in the employer's files and decide how much is held back. A one-off bonus can lead to too much being withheld, because the sum may be treated as if it were earned every payday.

Which large state's constitution bans an income tax, with a two-thirds vote of its legislature needed to repeal the ban?

Texas is among a handful of states that leave individual incomes untaxed. It does collect from companies through a franchise tax.

Which Midwestern state passed the first modern state income tax in 1911, two years before the federal one returned?

Wisconsin began collecting in 1912, and the money it raised prompted other states to copy the idea. Hawaii had taxed incomes even earlier, as a territory, from 1901.

Some tax protesters call the income tax amendment void, claiming which state was not formally admitted until 1953?

Ohio joined the Union in 1803, but Congress passed no official proclamation of that date until 1953. Courts have rejected the argument every time it has been raised.

Which president paid about $465,000 in back taxes in 1974 after scrutiny of his personal finances?

Richard Nixon had repeatedly said he would pay anything he owed, and the bill came while the wider scandal over his conduct in office kept growing.

Which songwriter wrote the wartime tune I Paid My Income Tax Today and signed its royalties over to the US Treasury?

Irving Berlin gave the Treasury a second song as well, Any Bonds Today?, written after Secretary Henry Morgenthau asked for a tune that would sell war bonds.

Which retirement account, named after a Delaware senator in 1997, is funded with money that has already been taxed?

Roth IRA savers get no tax break on the way in, but the growth and qualified withdrawals come out tax-free. The idea was first floated in 1989 under the name IRA Plus.

Which sultan's name was attached to an 1188 English levy of a tenth of revenues, raised to fund a crusade against him?

Saladin had captured Jerusalem in October 1187, and the tithe named for him became the largest tax England had ever collected. Anyone who joined the crusade was let off paying.

Britain's tax year begins on 6 April because Lady Day, its old start, moved when the country adopted which calendar?

Gregorian dates ran eleven days ahead of the old ones in 1752, so the quarter day of 25 March became 5 April. The tax year ends on that date, and the next one opens the morning after.

Canada's federal income tax was brought in by Finance Minister Thomas White to cover the costs of which conflict?

First World War spending left Ottawa with debts so large that it could not give the revenue up when peace came. Until then it had lived mainly on tariffs and customs duties.

Which country got its first income tax in 1860 from the founder of The Economist, sent there after a mutiny?

India's tax followed the rebellion of 1857, which had left the British administration in an acute financial crisis. The same Scottish businessman also presented the first Indian budget.

Which former Soviet republic adopted a flat income tax in 1994, charging 26 percent whatever a person earned?

Estonia was an early adopter of the idea. Russia followed in 2001 and saw real revenue from personal income tax rise by about a quarter in the first year.

Which East African country joins the United States in taxing citizens who live abroad, charging them a flat 2 percent?

Eritrea asks its people overseas for 2 percent of their foreign income, while the United States applies its full rates. In the vast majority of countries citizenship makes no difference to tax.

Members of churches in which country pay an extra 8 or 9 percent on their income tax, collected by the state?

Germany's church tax, the Kirchensteuer, supplies about 70 percent of church revenue. The lower rate applies only in Bavaria and Baden-Württemberg.

Which Swedish film director went into self-imposed exile in Munich after his 1976 arrest on income tax charges?

Ingmar Bergman was arrested in the middle of a theatre rehearsal. A prosecutor dropped the charges within two months, saying the alleged crime had no legal basis, but the director kept his base in Munich until 1984.

Which British prime minister brought income tax back in 1842, despite opposing it at the election a year earlier?

Robert Peel had campaigned against the tax in 1841, but a growing budget deficit forced his hand. Britain had already abolished it twice, the second time a year after Waterloo.

Which British band's 1966 chart-topper Sunny Afternoon is narrated by an aristocrat bemoaning what high taxes cost him?

The Kinks reached number one in Britain with it in July 1966. Ray Davies wrote the song at home while ill, and made its narrator a scoundrel so that listeners would not feel sorry for him.

Which parallel tax system was created after a Treasury chief revealed 155 high earners had paid no federal income tax?

Alternative minimum tax was aimed at that tiny group when Congress acted in 1969, yet by 2017 it was catching about five million taxpayers a year.

What name is given to profit from selling assets such as shares, taxed at lower US rates if held over a year?

Capital gains on anything sold within a year are taxed at the seller's ordinary rate. Hold on for longer and the gentler long-term rates apply, a preference that qualified dividends share.

Which kind of tax break is subtracted from the bill itself, where a deduction only shrinks the income being taxed?

Credit can even turn into a payment: the refundable kind pays out the difference when it exceeds the tax owed, while the non-refundable kind stops at zero.

Which three-letter abbreviation on a US tax return names the income figure used to phase out many deductions?

AGI stands for adjusted gross income, and for most individual tax purposes it matters more than gross income. Write-offs for medical expenses, for instance, are limited by a percentage of it.

Which windfall escapes US income tax for the person who receives it, with any tax falling on the giver's side instead?

An inheritance is not treated as income to the person who receives it, and neither is a gift. An employer's present to a worker is another matter: that counts as pay.

Which economic graph linking tax rates to revenue was reportedly sketched on a napkin for Dick Cheney in 1974?

The Laffer curve got its name from journalist Jude Wanniski, who was at the table that day. Arthur Laffer himself says he has no memory of the napkin.

Which welfare idea, popularized by Milton Friedman, would pay people whose earnings fall below a set threshold?

Negative income tax was first proposed by the British politician Juliet Rhys-Williams in the early 1940s. Friedman and his wife set out a concrete version in a book they published in 1962.

Which comedian played IRS agent Harold Crick, who hears a voice narrating his life, in Stranger than Fiction?

Will Ferrell's character learns that the voice belongs to a novelist who is writing him into a book and means to kill him off. Emma Thompson plays the author.

Which New York hotel magnate, nicknamed the Queen of Mean, was convicted of federal income tax evasion in 1989?

Leona Helmsley came under investigation after contractors who had worked on her Connecticut home complained that they had not been paid. Given four years, she spent less than two in custody.

Which baseball great served five months in 1990 for filing false income tax returns that hid memorabilia sales?

Pete Rose had left autograph and memorabilia income, along with horse racing winnings, off his returns. He was released in January 1991 after paying $366,041 in back taxes and interest.

Which heavyweight champion returned to the ring after retiring because of a $500,000 tax bill from the IRS?

Joe Louis watched interest pile onto the debt every year. Long after his comeback, an old Army friend gave him a job greeting tourists at Caesars Palace in Las Vegas.

Which future Secretary of State, a Nobel Peace Prize winner, wrote the 1913 federal income tax law almost alone?

Cordell Hull drafted the bill as a Tennessee congressman who wanted lower tariffs and needed revenue to replace them. He went on to serve longer as secretary of state than anyone else.

Which Washington, D.C. holiday, marking an act Lincoln signed in April 1862, can push the federal tax deadline back?

Emancipation Day falls on April 16, so when it is observed on the usual deadline, filers across the country get until the following Monday. The 1862 act freed people held in slavery in the District of Columbia.

Emperor Wang Mang levied an early income tax, a tenth of earnings from fishing and trade, in which country?

China's Xin dynasty ruler applied the levy to net earnings from gathering wild herbs and fruit, shepherding and other work off the farm. It caused so much discontent that it was abolished in 22 CE.

Britain's first income tax, announced by William Pitt the Younger in 1798, paid for a war against which country?

France and Britain made peace in 1802 and the tax was dropped, only to return a year later when the fighting resumed. Pitt had hoped for £10 million a year but collected just over £6 million in 1799.

Which president signed the Tax Reform Act of 1986, which cut the top individual rate from 50 percent to 28 percent?

Reagan made simplifying the tax code the main domestic goal of his second term, and worked with the Democratic Speaker, Tip O'Neill, to get the act through Congress.

What name does the Tax Foundation give the day when Americans have theoretically earned enough to pay the year's taxes?

Tax Freedom Day was devised in 1948 by Florida businessman Dallas Hostetler, who trademarked the phrase and worked out the date himself for two decades before handing it over in 1971.

Which author's unfinished novel The Pale King follows Internal Revenue Service employees in Peoria, Illinois?

David Foster Wallace's book came out after his death, on April 15, 2011. It was a finalist for the 2012 Pulitzer Prize for Fiction, in a year when the board gave no award at all.

Which president's 1952 plan replaced the tax bureau's appointed collectors with career officials after bribery scandals?

Truman acted after a run of tax evasion and bribery cases among the bureau's own staff. A year later the agency took a new name, the Internal Revenue Service.

Which four-letter abbreviation names the system Britain introduced in 1944 to take income tax straight from wages?

PAYE, short for pay as you earn, was devised by Sir Paul Chambers and went nationwide after trials in 1940 and 1941.