There isn’t much that’s fun about taxes, but we thought we’d try to find something. So we found seven fun — well, maybe just fun-ish — fact about taxes.
We do think it’s at least interesting that Rhode Islanders didn’t have to pay taxes for 40 years. And it’s fun to find out what kind of a job Sam Adams did as tax collector, or what Mainers did when the federal government actually returned money to them.
Here, then, are seven fun facts about taxes.
Rhode Island enjoyed a 40-year holiday from taxes starting in 1710 when the General Assembly cranked out money on the printing press.
Here’s how it worked: The colony had a number of land banks, which loaned paper money for mortgages on land. The loans generated interest, which the colony’s government used to pay for its operations.
The value of the paper money often declined, which made it easier for landholders to repay their debts. Rhode Island’s supply of paper money also gave the colonists a medium of exchange. The arrangement made practically everyone happy – except for merchants in London, who had to accept the colonists’ depreciated money to pay off their debts.
When the merchants weren’t happy, Parliament wasn’t happy. In 1751, Parliament passed the Currency Act, making it illegal for the Rhode Island’s General Assembly to issue any more bills of credit not backed by taxes. By the middle of 1754, Rhode Island neared insolvency, and Rhode Island towns began collecting taxes.
Sam Adams had a job as tax collector, and he was lousy at it. Adams had inherited his father’s malt business, but it failed. In 1756 he ran for and won the post of Boston’s tax collector to support his family. But Bostonians didn’t really want to pay their taxes, and Sam Adams didn’t really want to collect them.
Then a smallpox epidemic broke out in 1764, forcing many people in Boston to close their businesses. Sam Adams was inclined to overlook tax payments from people who suffered financial reverses. His laxity made him popular among Boston’s working class, but caused him trouble. As tax collector, he was liable for uncollected taxes.
By 1765, Sam Adams owed £8,000, and Boston came close to bankruptcy. Adams sued people for nonpayment of taxes, but still came up short. His friends ended up paying most of the deficit, and Boston Town Meeting made up the rest.
‘Less Real and more Ideal’
In order to pay off its Revolutionary War debt, Massachusetts raised taxes to a level four times that before the war. The people of Greenwich, Mass., complained, “Our Grievances Were Less Real and more Ideal then they are Now.“
In a once exciting but now forgotten episode in U.S. tax history, the federal government ran a surplus of about $30 million in 1836. Revolutionary War debt had been paid off by the sale of public lands in 1836. What to do with the money generated fierce arguments, of course, but in the end Congress decided to give most of the money back to the states. Each state could do with it what it wanted.
As state lawmakers debated about what to do with their share, ‘high hopes were awakened in all children who were out of pocket-money.
Maine, a state for only 17 years, decided to give the money back to the taxpayers. Every resident – including children — received about $2 from the state of Maine. A Deer Isle farmer’s wife named Salome Sellers decided to buy a pair of candlesticks with her money. She lived to be 108 years old, and was the last person born in the 18th century to die in the 19th. Her house is now a museum and the candlesticks on display.
New Hampshire in 1821 tried to raise money for a public university by taxing the capital stock of banks. Seven years later the state abandoned the plan as the tax didn’t raise nearly enough money.
Instead, New Hampshire established the Literary Fund, which it divided every year among the towns. The money was to be spent for the ‘support and maintenance of common free schools or other purposes of education.’ The Town of Peterborough decided to spend it on a municipal library.
Vermont Declares War
Vermont declared war on Germany three months before the United States did so it could give its GIs a raise. In anticipation of hostilities, the United States had reinstituted the draft in 1940. Over the course of the war, 50,000 Vermonters were drafted or enlisted, close to 14 percent of the state’s population. Enlisted men earned an average base pay of about $70 a month, which put a financial strain on many young military families.
On Sept. 16, 1941, Vermont’s lawmakers voted a $10-a-month bonus to the draftees and enlisted men.
But under Vermont’s constitution, they would have had to vote for a new tax in peacetime in order to appropriate the funds. They could vote a bonus, however, during a time of armed conflict.
Fortunately for Vermont draftees and their families, President Roosevelt had on Sept. 11, 1941 ordered the U.S. Navy to shoot first if it encountered German warships entering U.S. waters. Vermont’s lawmakers used that as an excuse to declare war on Nazi Germany – and give a bonus to Vermonters in the military.
Connecticut’s 42-Day Income Tax
Connecticut had an income tax for 42 days, and then it didn’t. In 1971, the state had accumulated a debt of a quarter of a billion dollars. Lawmakers struggled with how to get back into the black. Since Connecticut had the highest per-capita income in the country, the General Assembly decided on an income tax – in a late-night budget session at the end of June. The income tax was to take effect in October.
The public reacted fast and furiously, though. So a special session of the General Assembly repealed the income tax on Aug. 12, 42 days after passing it. Instead, they increased sales taxes and raised tuition at the University of Connecticut.
Twenty years later, the General Assembly approved another income tax, which survives to this day.