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When Form 1040 was brand new

While doing research for an SMI project a few months ago, I stumbled across a 1985 Wall Street Journal article about the earliest days of the U.S. income tax.

With this year's tax-filing deadline almost upon us, it's an opportune time to post an excerpt from the article, authored by historian Thomas V. DiBacco (now retired from American University). You'll see that Congress-induced confusion is nothing new.

If you're about to go crazy doing your federal income tax, just be thankful you weren't around in 1914. That was the first year that Americans had to fill out a Form 1040 after the income tax, or 16th Amendment to the Constitution, was ratified in February 1913. Everything was in a mess.

For one thing, Congress didn't pass the implementing legislation until Oct. 3, 1913, which meant that the handful of officials and clerks authorized by the act had too much to do in too short a time.

No tax forms were available until Jan. 8, even though the deadline for submission was March 1....

The biggest problem was that the Internal Revenue regulations didn't answer all the questions that taxpayers had.... One of the most confusing provisions of Form 1040 was the exemption allowed husband and wife filing a joint return: Some taxpayers interpreted the authorizing language to permit a $4,000 exemption for both; others saw it as $7,000 for both; and still others were certain that it meant $3,000 to each.

Hardly a day went by that the Treasury Department did not issue a clarifying interpretation.... By Feb. 21, the government threw up its hands, saying that no more clarifying statements would be issued before March 1....

Expectedly, there were numerous errors in the returns. But the Internal Revenue was scarcely precise about the extent of the problem: The range of errors, it announced, was from 30% to 80%. The most common problem involved the tax period covered by the return (March to December 1913), which meant that only five-sixths of income and deductions were to be reported.

A few months later at the National Tax Conference in Denver, experts raked the government's noble experiment with income taxes over the coals.... A.C. Rearick of New York blamed the confusion of the first year on the taxing verbiage of the congressional act. "To begin with," he said, "the language in which the Act is couched is involved and its rhetoric bewildering. It contains sentences hundreds of words in length, in which clauses are added to clauses and provisos heaped upon provisos."

But there was at least one good thing: the original 1040 had only one page of instructions!

How much tax would you have paid under the original 1913 income tax law? You can find out by using the online calculator here.

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