
What F. Scott Fitzgerald’s tax returns reveal about his life and times (2009) - danso
https://theamericanscholar.org/living-on-500000-a-year/
======
roymurdock
_Before World War II, the government did not know what anyone made. Only the
wealthy and upper-middle class filed returns—less than 10 percent of the
population. The system was based on what the irs called “self-assessment,”
which meant that the taxpayer told the government what he or she earned the
prior year and then sent a check on March 15. Some information returns were
sent to the government, but the government had no capacity to match the return
to the taxpayer and the returns piled up in warehouses. Not until 1962 did the
government’s computer system begin to efficiently match the information
returns to the taxpayer. During the 1920s and 1930s, the tax system relied
almost entirely on the honesty of taxpayers._

It's amazing to think that there was once a time in US history when the
government could sustain itself through the honesty and goodwill of the
richest 10% of its citizens.

I wonder what would happen if we returned to the goodwill tax model. If we had
a simple tax code with self-reported earnings where we spent far less on
hunting down and punishing cheaters and freeloaders, and instead left it as a
matter of conscience for those who had amassed their wealth and raised their
families through the good grace and fortune of living in the US.

Do you think our collective social fabric would be strong enough to fund an
effective government? Or are we too far down the path of the self-centered,
get mine at all costs, cheat the system if possible mindset?

~~~
rayiner
The top 10% of earners paid 68% of federal income taxes, so in terms of
dollars we could probably get rid of federal income taxes for the bottom 90%
without too much trouble.

Of course, the bottom 90% pays most of the FICA taxes. But it's kind of
illusory to say that's different from what the system was like in the 1920's
and 1930's. The first Social Security check wasn't cut until 1940, and
Medicare didn't exist until the 1960's. Prior to that the bottom 90% paid for
old age and disabled care directly by supporting their elderly parents or
disabled family members directly instead of indirectly funding social security
and medicare. A lot of the "growth" in government tax burden is those programs
moving what was previously a household economy onto the government ledger.

And note that the article talks about federal tax receipts, not state taxes.
Direct state tax burden isn't all that different from what it was in the
1930's:
[http://taxfoundation.org/sites/taxfoundation.org/files/docs/...](http://taxfoundation.org/sites/taxfoundation.org/files/docs/Chart2_1.jpg).
And I assure you state property tax collectors were not on the honor system
even back then.

It's really interesting to look at where the money goes. Total federal + state
spending was about 10% of GDP in 1930. It's now almost 35% of GDP. That's
almost entirely attributable to two things: defense spending (3-5% of GDP) and
transfer payments (20% of GDP): [http://fortune.com/2012/08/27/wheres-all-
that-government-spe...](http://fortune.com/2012/08/27/wheres-all-that-
government-spending-really-going). In other words, almost all of the increase
is government programs to move money around in the economy.

~~~
selimthegrim
There are certain states whose employees are exempt from FICA. This makes for
some interesting double-dipping case studies cf.
[http://www.governing.com/columns/public-money/FICA-free-
lunc...](http://www.governing.com/columns/public-money/FICA-free-lunch-
crowd.html)

~~~
spinchange
This is somewhat misleading: It's not exempt statewide for all employees in
those locales, only for certain employees like teachers and firefighters who
are paying into alternate pension systems.

The headline number is 6MM people aren't paying in, but the combined
population of those states is almost 112MM and the total population is 319MM.
It's a substantial number, I suppose, but not like 30% of the workforce.

------
danko
It's interesting how this article conflicts the narrative (and indeed,
Fitzgerald's own narrative) about his life. The narrative was that they lived
fabulously until the simultaneous stresses of the the stock market crash and
Zelda's mental breakdown in 1929. Turns out that at least from an _income_
perspective, he was doing quite well up until the moment he died. But Zelda's
healthcare costs ruined him anyway, and he cognitively backed himself in a
corner in terms of making adjustments.

It reminds me of a quote from another famous author, one Charles Dickens:

 _" Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen
[shillings] and six [pence], result happiness. Annual income twenty pounds,
annual expenditure twenty pounds ought and six, result misery."_

~~~
dang
He gave that line to Mr. Micawber and of course was intimately acquainted with
poverty, but by the time Dickens wrote that he was as rich as a 19th century
rock star. Indeed he made piles of money by touring—writers used to moonlight
as performing artists. Once movies came out, that dried up, so they wrote
screenplays instead, like Fitzgerald.

------
gwern
Remarkable to think that in those days one could become so wealthy off short
stories, of all things. Business models keep changing, in literature as
elsewhere.

------
Amorymeltzer
To me, the most fascinating thing about this story is the starkly different
picture it paints of wealth in America. We're currently debating how much of a
middle class there even IS anymore, and they're talking about how upper-middle
class families had servants.

There's a lot going into the difference, for sure, but its quite a different
world.

~~~
rayiner
That's the wrong takeaway from that point. It's a good thing that upper middle
class people today can't afford to have lower class people do domestic
services for them. It's an indication that lower class people can make a lot
more money doing non-domestic work.

Although the task rabbit economy is pushing us back in that (wrong) direction.

~~~
yummyfajitas
It's actually an indication that lower class people can consume quite a bit
regardless of whether they work. It's hardly clear that this is a good thing.

[http://www.bls.gov/cex/2011/Standard/income.pdf](http://www.bls.gov/cex/2011/Standard/income.pdf)

It's hardly clear how task rabbit is pushing is in that "wrong" direction -
it's not as if task rabbit has somehow eliminated other good options (such as
not working and receiving wealth transfers, or perhaps those unsustainably
overpaid factory jobs politicians like to talk about).

~~~
rayiner
TaskRabbit is pushing things in the wrong direction because people should work
together for institutions, not work for other people as personal servants.
That's not how you build an equal society.

------
rsp1984
What I don't understand is how in the US in the 1920s the tax rate was in the
single digits while deficit was negative (!) and debt was low [1], while today
tax rates are at 40%, deficit is about 17% (!) of budget and debt is over 100%
GDP. What on earth went wrong?

[1]
[http://www.usgovernmentspending.com/debt_deficit_brief.php](http://www.usgovernmentspending.com/debt_deficit_brief.php)

~~~
dllthomas
_" What on earth went wrong?"_

Immediately thereafter? The Great Depression.

~~~
rsp1984
Well that one wouldn't have lasted until today, would it?

~~~
mhuffman
The govt. began to care for people that had previously been cared for by
family members or religious groups. This includes the very poor, the elderly,
the disabled, etc. That makes the bulk of it.

~~~
cft
In exchange for votes from such people. Before, many of those people were
disenfranchised.

~~~
cubancigar11
Family system used to take care of elderly and the disabled, which ultimately
meant housewives were supposed to do that, unless you could afford a caretaker
(which was socially frowned upon in middle class).

Then women got voting power and family system broke down, replaced by social
structure. In a way today's capitalist Europe is closer to what Marx suggested
than USSR.

