Our next tax trivia question is:

In 2000, Vice President Cheney and his wife owed federal taxes of $14,295,058 on adjusted gross income of $36,086,635. After taking into account withholding and other payments, how big a check did the Cheneys have to write when they mailed in their taxes? (I’ll take answers within $100,000)

For more about the giveaway, including rules and prizes, check out this post.

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Our first tax trivia question is:

In 1913, Congress levied a one percent tax on net personal incomes above $3,000, with a six percent surtax on incomes above $500,000. As the nation sought greater revenue to finance the World War I effort, the top rate of the income tax rose considerably. What was the top income tax rate during World War I?

For more about the giveaway, including rules and prizes, check out this post.

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So, show of hands: who really thought that former Massachusetts Governor and current GOP presidential hopeful Mitt Romney would win South Carolina?

My hand will stay firmly by my side. I expected Romney to lose South Carolina. I also still fully expect him to get the nod from the party at the GOP Convention despite noting earlier that no Republican candidate for President has ever failed to win South Carolina and gone on to secure the nomination. I think he’s the exception. (No, this isn’t an endorsement, it’s an educated guess.)

I know South Carolina pretty well. I grew up in North Carolina (much of my family still remains) and spent many a summer in Greenville; I’ve been to family reunions in Georgetown; been porch sitting in Rock Hill and wandered around the naval base in Charleston with my brother. And yes, I once bought a Fiat in Pumpkintown. With my background, I feel confident that I easily could rattle off ten reasons why Romney lost South Carolina.

Not releasing his tax returns isn’t one of them.

Despite that fact, which I’m sure his handlers already know, Romney is still getting grief about not releasing his returns. This week, apparently still reeling after the primary loss to former House Speaker Newt Gingrich, Romney is going to do something he’s never done before: make his tax returns public. He plans to release his 2010 returns and offer an estimate of what he’ll pay in 2011 (someone get that tax preparer a redeye quick).

I don’t think it will make much difference in the race at this point – which is exactly why Romney is releasing the returns. This is his Obama birth certificate moment. I think Romney realizes that voters are going to talk about those returns until he makes them public. The more that voters focus on the lack of returns, the worse he’s going to look. Romney’s supporters want to move the discussion along.

So what will those tax returns reveal? My guess is nothing we haven’t heard already. We know that he’s rich. Crazy rich. We know that he has offshore accounts. And we know that he pays “about 15%” in taxes.

What else is there to see? I’m sure there’s something there to pick on. But I don’t think we’re going to see any game changing information in those returns. But it sure makes good fodder for Gingrich, who told NBC’s David Gregory:

If there are things in there that can be used against him, we better know it before the nomination. The last thing Republicans want to do is nominate somebody that collapses in September.

You know, like an old ethics violation related to federal tax laws.

Good thing Gingrich is just looking out for the party.

All that said, when the returns are released later this week, I think we’re going to see a flurry of activity that turns out to be pretty much a non-event. I think, by midweek, we’ll all be saying, “There’s nothing to see here, folks, let’s move along.”

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Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl) or hang out with me on Facebook.Similar Posts:

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Is your mortgage interest deduction at risk?

What about your charitable donation deduction? Your real estate tax deduction? Your medical expenses deduction?

Under a new conservative plan introduced by Sen. Pat Toomey (R-PA), one of the members of the “Super Committee”, the amounts that taxpayers could claim as deduction on a Schedule A would be limited. In exchange, tax rates would drop in every income tax bracket.

The details are still being fleshed out but it would appear that the most dramatic cuts would start at the top, with tax rates dropping from 35% to 28%, to make up for the initial loss in deductions. Cuts would follow through all of the brackets with the bottom tax rate slated to be 8% (yes, still less than Warren Buffett).

Tax breaks from itemized deductions would not be eliminated but they would be limited, likely as a percentage of adjusted gross income. It’s also been suggested that the amount of employer-provided health insurance excluded from taxable income would be limited as a percentage of income; the latter is clearly meant to head off plans to tax health care benefits in the future.

So you’re waiting for the righteous indignation from me, right? Here’s the thing: I think this plan is smart. Flawless? Of course not. But it shows some promise.

For years, most tax pundits, myself included, have chirped about how expensive itemized deductions are in terms of lost revenue. But, most taxpayers, and again, myself included, don’t really want to give them up. But realistically, the scale of itemized deductions benefit a limited number of taxpayers at a fairly steep cost in terms of lost revenue. In addition, itemized deductions can be complicated and time consuming to figure and substantiate, costing taxpayers in terms of return prep and increased risk of examination.

It makes sense that the less appealing it is to itemize, the more likely taxpayers will claim the standard deduction. And despite the sense at tax time that everyone itemizes, most taxpayers do not: the overwhelming majority of taxpayers opt for the standard deduction. Only about a third of taxpayers choose to itemize.

Eliminating extra breaks and flattening rates is astonishingly simple. And – this should make some folks happy – it creeps a bit closer to the idea of a flat tax. (I said closer, not there. You know I’m not a fan.)

So does it have a chance?

Not as proposed. There’s a lot going on.

For one, you can bet that before you’re finished reading this piece, lobbyists for the real estate industry will be furiously making calls and plotting strategies to block it. Despite the fact that taxpayers don’t actually “save” money by spending more on a home, the home mortgage interest deduction is often incorrectly framed as the only reason that the real estate market stays afloat. And while a haircut limitation on interest deductions will not affect most taxpayers or significantly shake up the market, you can bet that the hullaballoo that follows will make you think that it’s the end of the world.

Charities don’t like limitations either because of the potential to dissuade high dollar donors. Statistically, more donations per capita are made by taxpayers who do not itemize (think those of you who drop coins in the Salvation Army bucket or some dollars in the offering plate) but on a dollar for dollar basis, charities tend to receive the largest support from big donors.

More importantly, Democrats are not fans of the plan, claiming that it disproportionately benefits those at the top. While it’s true that the proposal would include the biggest cuts at the top, the thinking is that the limit on the deductions for those taxpayers should result in equitable results. That’s yet to be seen.

Efforts to make this partisan fight are confusing since President Obama proposed a similar strategy in 2009 for taxpayers at the top (with some exceptions, the same taxpayers that are most affected by this plan). Obama was soundly criticized by Republicans at the time who failed to take note that the plan was not all that different from the tax structure under President Reagan.

That doesn’t mean that the Republicans have resounding support from within their own party for the proposal. While House Speaker [entity id="person_4eb14570b9de9eec67bf30cb" style="padding: 1px; color: #fff; background: #336699;" class="forbes_entity" active="true" item_id="person_4eb14570b9de9eec67bf30cb" key="john-boehner" description="He has declined dinner invitations from the world's most powerful man and also has the power to break his agenda. <br /> 2011 Lowlight: In October protesters disrupted Boehner's golf game in Newport Beach, Calif., at Pelican Hill Golf Club, insisting that the GOP approve Obama's jobs bill." latitude="0" longitude="0" display="John Boehner" image="http://images.forbes.com/media/lists/people/john-boehner_50x50.jpg" natural_id="faris/14388" type="person" lists="[{"key":"powerful-people","net_worth":0,"name":"Powerful People","rank":67}]” active=”false”]John Boehner[/entity] (R-OH) indicated that he might be on board with the idea, Republican majority leader Eric Cantor (R-VA) hasn’t been so supportive.

For now, the idea is a work in progress. The “Super Committee” has six days to make it something more. Do you think they’ll get there?

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Today, more than 500 elementary school students in our local public school hauled recyclable bags filled with more recyclable plastic bags to school to mark America Recycles Day. Our green clubs are counting the bags – we already know that one kindergarten class brought in nearly 2000 – and putting them aside to reuse (for our school book sale), repurpose (we’re making tote bags and other crafts) and recycle.

It’s important to me that our kids understand the importance of reusing, repurposing and recycling plastics, glass, paper and other goods where possible. It’s something that I learned as a young girl from my dad, who was a big advocate of conserving and preserving our resources. I know what you’re thinking. He was some long-haired, tie-dye wearing, hippy liberal, right? Wrong. Try a clean shaven, gun owning, khaki wearing, church going conservative.

I grew up in rural North Carolina, not far from the intracoastal waterway. I spent much of my childhood roaming the woods with my brothers, crabbing off of the neighbors’ bulkhead, wading through the sound for clams and crabs and combing the shoreline for shark’s teeth with my dad. It was, in many ways, an odd paradise.

My dad was (and is) fiercely proud of the land that he owned. He taught us to have a healthy respect for our land. We took care of it. We gardened and composted: a pile across the creek served as a great spot for building compost for our plants – and more often than not, food for the local foxes and possums.

We also recycled. We brought our bottles back to the store and we bundled our newspapers and magazines in a pile to drive out to the recycling center when we took the trash (we didn’t have private or municipal pick up in our little town). We did our part not because the government told us to or because it was trendy. We did it because it was consistent with our priorities that you take care of what’s important.

Over the years, I remained committed to the values that my dad taught me. I recycled. I bought locally when possible. I conserved energy – even now, I can still hear his voice in my head yelling at me to turn off the lights. I even turned vegetarian for a bit for totally ecological reasons, though while it was easy enough to give up a steak or a hamburger, I couldn’t stay away from a good pulled pork sandwich for long.

But over that same period of time, something else happened. Somehow, caring about the environment became a political statement. And necessarily, the same could be said for not caring about the environment. Breathable air and drinkable water have become political symbols.

Interestingly, while conservatives have increasingly turned away from environmental protections as a government mandate, it was President Nixon who signed the Environmental Protection Agency into law. He went on to ask for federal dollars to improve air and water quality; to establish guidelines for lower motor vehicle emissions; and launch federally-funded research to reduce automobile pollution.

But in this new era of faux fiscal conservatism, it’s not okay to spend money on the environment. As politicians talk more and more about ditching the Tax Code, they seem to suggest that less government interference – and less tax dollars – is the solution to all of our problems.

Funding for the EPA continues its downward spiral (reduced 13% from 2010 for 2012). And federal income tax credits for energy efficiency which were promoted in 2006 have been eliminated or scaled back for 2011 – some are set to disappear completely in 2012. In an era where tax cuts are generally promoted by conservatives, tax breaks for energy efficiency and environmental measures have been discounted.

How did this happen? It’s clearly political, not economic. Somehow, the message of environmental responsibility has been co-opted as a liberal agenda; increasingly, conservatives try to put forth the idea that the environment isn’t a priority item. I’m not sure how or why that happened.

The fervor that would divide conservatives and liberals on environmental issues was most apparent during the Bush-Gore Presidential race in 2000. Gore painted himself as a champion of the environment, a move that many used to characterize him as out of touch and anti-business. Ironically, after his win, Bush quietly introduced a number of tax incentives meant to promote conservation and energy efficiency (seemingly at odds with Cheney’s position).

There has been very little energy policy talk in the latest run up to the presidency, save for the occasional stab at oil prices. Americans are smart enough to understand that energy policies and environmental concerns don’t start and stop with drilling, oil production and the cost of gasoline. That said, there’s not been any significant dialogue about what might happen moving forward with respect to energy credits and tax incentives. Is it because taxpayers and voters don’t care? Or because politicians are scared to take a position? I would suggest that it’s the latter.

I’m not about big government. And I don’t think that throwing money at a problem is ever a complete solution. But I am skeptical about a budget or a tax plan that would suggest that taking money away from a problem is a complete solution. Is it possible that there’s an answer somewhere in the middle? And if so, does either party want to talk about it?

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Let’s say that you have a shot at your dream job. You’ve done your homework, you’ve put in the hours, you’ve managed to get through the interview. There’s just one more thing: your tax return. Your potential employer has asked to you to disclose your tax return with the understanding that the information on the return (Social Security numbers and other private information redacted, of course) might be made public.

So do you do it?

I asked this question on Twitter and Facebook and was pretty surprised at the results: 54% of taxpayers said yes. I assumed that most taxpayers would say no. Taxpayers tend to be very guarded about their financial information. I’ve often said that it’s easier to get people to reveal their weight, the number of sexual partners they’ve had or their IQ than it is to get them to tell you how much they paid in taxes. It’s all so secret.

Of course, adding to the mystery, the U.S. considers individual federal income tax returns to be private (unlike in some other countries). In fact, you probably know that the IRS is prohibited from releasing taxpayer information unless authorized (or by statute).

However, for the past forty years or so, presidential candidates have been called upon to make their individual federal income tax returns public. If you’re interested in seeing those historical tax returns, the Tax History Project has an online collection for most Presidents and Vice Presidents through Nixon, including recent years for Obama and Biden, though there’s nothing from President Ford. You’ll note that most have complied with the request but not all. And there’s nothing that requires the disclosure: despite popular belief, releasing those tax returns is not mandatory.

Still, it makes taxpayers nervous when candidates don’t – or won’t – release their tax information. Maybe it’s simply morbid curiosity but most likely, taxpayers want to be assured that there’s no conflict of interest or other hidden ties that might influence a candidate’s political decisions. And, fair or not, some taxpayers believe that you can tell a lot about a candidate’s internal moral compass by how he or she appears to spend money: you might remember that Vice President Biden was soundly criticized for his low percentage of charitable giving relative to his taxable income while Sen. McCain received kudos for donating the increase in his Senate salary to charity as a statement against Congressional pay increases.

It poses an interesting dilemma for candidates: reveal too much and be criticized or reveal nothing and, well, be criticized. Most candidates opt for the former.

That dilemma is exactly what GOP candidate Rick Perry is gambling on by calling on fellow GOP candidate Mitt Romney to release his federal income tax returns. Perry has already released his returns, showing a bit over $200,000 worth of income for 2010. Romney, however, has balked at releasing his returns. In fact, Romney has indicated that he won’t even consider the matter until next year – and he’s not making any promises then.

So why the resistance?

Romney is rich. As in über rich. Romney’s net worth is estimated to be northwards of $250 million. He is thought to earn close to $10 million in income per year with some speculation that the number is closer to $40 million (it’s hard to tell exactly since Romney has not released income information even while serving as Governor).Similar Posts:

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Twenty five years ago, pop singer Michael Jackson was in the news. Big shoulder pads were all the rage. Libya was under siege. Federal spending outpaced revenues. The U.S. was fighting its way out of a recession. And following a round of tax cuts that didn’t live up to expectations, the words “tax reform” were on the tongues of taxpayers.

It’s deja vu all over again.

Tomorrow marks the 25th anniversary of the Tax Reform Act of 1986, signed into law on October 22, 1986, by then President Ronald Reagan. The aim of the tax reform act was terribly familiar: simplify the income tax code.

Special Report: 25 Years After Tax Reform, What Comes Next?

It’s the same discussion that is playing out today in Congress and in the presidential debates. Interestingly, though, today we talk about tax reform as though it’s an impossibility, as if it’s too big a task. But maybe that’s the wrong attitude.

Tax reform isn’t impossible. We’ve done it before. And we did it big. The changes under the Reagan Tax Reform Act were so dramatic that the Tax Code was renamed the Internal Revenue Code of 1986 – the first such retitling since the days of Eisenhower. Despite 25 years of additions, deletions and modifications to the Code, you’ll still see it written that way today: it’s the Internal Revenue Code of 1986, as amended.

So, if reform isn’t impossible, what’s holding up the works?

I would argue that we’ve had a significant shift in politics in this country and not in a positive way. In 2011, it’s become all about us versus them. It’s the 99% versus 1%. Republicans versus Democrats. Corporate taxpayers versus individual taxpayers. Wall Street versus Main Street.

And there doesn’t appear to be one personality strong enough to bring those factions together.

Like him or not, then President Ronald Reagan is considered largely responsible for bringing the parties together for long enough to push modern tax reform through – and the Democrats had the good sense to not stand in the way. They had something to gain from tax reform, too. Despite the fact that Democratic hopeful Walter Mondale was widely expected to tout tax reform in his stump for the presidency, he didn’t. That made it appear in the mid-1980s that tax reform wasn’t a top priority for the Democrats. After handily winning a second term in 1984, President Reagan could have taken the easy way out and left tax reform for his successor. And the Democrats could have waited until the next election to raise the issue again. That’s how politics works today, right?

But that’s not what happened. Reagan did push for reform. And for all that the Republicans are given credit for the Tax Reform Act of 1986, it was a truly bipartisan effort: the final bill was co-sponsored by top Democrats at the time: Rep. Dick Gephardt (D-MO) and Sen. Bill Bradley (D-NJ). This lead Rep. Dan Rostenkowski (D-IL), the Chair of the powerful House Ways and Means Committee to remark:

A Republican President has joined the Democrats in Congress to try to redeem this longstanding commitment to a tax system that’s simple and fair.

Simple and fair. Sound familiar?

Well, maybe it didn’t get there completely. But the resulting law was a huge shift in terms of how we viewed taxes in America. Marginal rates in the early 1980s were quite high with the top rate hitting 70% on unearned income and 50% on wages – those rates were reduced dramatically under the new law, closer to the rates that we pay today. The so called “marriage penalty” was relaxed to reflect a changing demographic with more women in the workplace, an increase in double income households and more couples choosing to live together rather than to get married. And, of course, the elimination of most personal interest deductions, including those for personal loans and credit cards, while clinging to the home mortgage deduction is probably the most widely recognized of Reagan’s tax changes for most Americans.

The ideas touted under the reform efforts were rather radical. The goal, of course, was to make things simple. That meant taking out the tax preference items like deductions and credits, widening tax bases and reducing rates. The idea was to try to achieve equal treatment for taxpayers of equal income – not quite the same as the flat tax (viewed as regressive) but rather, to achieve parity within individual classes of income. It’s both radical and brilliant – even if, again, we didn’t quite get there.

But perhaps most significant in terms of tax policy, Reagan did something that our recent partisan presidents could (or is it would?) never do: he switched course when things weren’t working as planned. And you know what? It wasn’t called flip-flopping. His party didn’t abandon him. In fact, he received wide support when he tweaked his 1981 cuts (the first set of the so-called “Reagan tax cuts”) in 1982, 1984 and 1986. Reagan, either through public opinion or his advisors, realized that the 1981 plan was a bit overly ambitious considering the economic climate of the country and rolled back. The resulting tax picture in 1986 didn’t rely on simply slashing rates but looking at the bigger picture of tax reform. And apparently, it worked.

Now, however, we’ve painted our political parties into corners. We tell them we want reform but we’re not willing to budge on our tax preference items. We’ve made it about them, not us. And maybe that’s not the right direction.

What we’ve done is make government the focus of tax reform and not the agent of tax reform. It’s no wonder, with all of the fingers in the collective budget pot, that Reagan infamously quipped about the system that “the nine most terrifying words in the English language are: I’m from the government and I’m here to help.”

But why is that?

Sure, it’s a rhetorical question. But as much as we want to blame Washington for this mess that we’re in, we have to step back and look at how we got here. In that respect, learning from the successes – and the mistakes – of our predecessors makes a lot of sense.

And maybe one day, we can all breathe a sigh of relief – and not an intake of breath – when we hear the words: I’m from the government and I’m here to help.

Because maybe we’d believe it.

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I wasn’t going to write this post. I thought about it long and hard and I had promised myself that I wouldn’t write it because I didn’t feel that I had anything meaningful to add to the conversation of the day. And I didn’t want to appear self-serving. And I didn’t want this to be yet another 9/11 blog post that had the feel of “I must write something because it’s 9/11.”

And so I went apple picking with my kids. It was a wonderful day.

On the way home, I caught a little bit of the tribute on the radio and for a second, I felt guilty. I felt guilty for not being sad and not sitting at home watching the news and remembering the day.

For the record, I remember where I was (my office) and who I was with (my new staff on their first day) when the towers came down. I remember the frantic phone calls looking for my husband (he was at the airport). I remember calling my mom to tell her that I was okay (you know she’s freaked out about my living in the big city up north anyway). But most of all, I remember crying and watching TV and thinking that things would never be normal again.

I grieved along with the rest of the country after 9/11. I wondered how we would pick up and move on. I was sad for my friends and neighbors who lost their loved ones. I feared for my brother in the military who I love dearly and while he’s a smart guy, I knew that he could be sent off to fight in a country that I’m not sure he could find on a map. I worried about what the next day would bring. Our whole world had changed so dramatically, it felt surreal.

Last year during the anniversary, my older daughter caught some footage of the crashes on CNN. She had seen some of it before but it was clearly time to have a longer chat with all of my kids. I wanted them to hear about the events of that day from me and not from their friends and not from the press. But they had already seen and heard a lot, it turned out. So I listened to them instead, trying to find the words to explain why it happened and convince them that they were going to be okay. And I struggled to answer my then 6 year old, who is Christian, who demanded to know why someone could say on TV that they hated Muslims when her 6 year old cousin is a Muslim and “they don’t even know her.”

I realized then – even though I already knew – that our country has changed. We think about things in a different way. But I happen to think that for the most part, we’re also a little bit wiser and a lot kinder. I think we’ve learned to appreciate how our entire world can be altered in the matter of a few minutes and yet, somehow we continue to find the strength to move forward. We answer the difficult questions instead of hiding from them.

And so, as I listened to the tribute on the radio, I stopped feeling guilty and instead, I was proud. I was proud of our country and our citizens for having lived through that terrible day ten years ago and not having it define who we are.

I guess getting back to normal is relative. But it was a dark day for our country. And ten years later, I went apple picking with my kids.Similar Posts:

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I’ve received a lot of emails lately asking me to explain what the debt ceiling is and what it really means. It seems that it’s a term that Congress likes to throw around without a lot of explanation. So here’s the scoop:

As of August 2, the United States can’t pay its bills anymore. We will officially be out of available resources, including credit. We’ll have reached our debt ceiling which is a cap set by Congress on the amount that the government can legally borrow.

To put it another way, it’s as if your bank account is nearly empty and AmEx is threatening to cut you off once you reach your credit limit.

It’s kind of a bizarre concept as it applies to the government because the cap is self-imposed. It’s not so much our creditors that are screaming about the debt as it is Congress.

Congress set the first debt ceiling way back in 1917, which not coincidentally marked the year that the U.S. entered World War I. With costs soaring to pay for the war, Congress realized that it would be impractical to have to issue an okay every time we needed to borrow more – mostly through bonds at that time – and set an initial limit of $11.5 billion on spending (CRS report downloads as a pdf). The idea was to offer some flexibility for borrowing but to keep a check on the amount that could be actually be acquired without direct approval. Pretty smart, right?

Nearly 100 years later, the debt ceiling is $14.294 trillion. And we’ve already hit it. That sounds bad. And it is. It’s clearly troubling that our debt is growing faster than the economy and has been doing so for years.

Let’s face it: nobody likes to be in debt. And our spending doesn’t seem to give us hope that we’re going to get out of debt any time soon. And those numbers are huge.

Think back to that first debt ceiling. In 1917, $11.5 billion was a ton of debt for the country. In today’s dollars, with inflation factored in, it’s equivalent to more $217 billion, considerably less than today’s debt ceiling. Wow, right?

And like it or not, we’ve been moving the debt ceiling up and down for a bit now – but mostly up. We actually hit the most recent ceiling in May but with some creative finances, we’ve been able to stave off “the big one” – that August deadline.

You see, every time a member of Congress votes to raise or lower taxes or to increase or decrease spending, they’re maneuvering around the debt ceiling. They’re basically taking a look at what we have in the budget and making a decision about priorities. It’s kind of like the game that almost all of us have played at one time or another while staring at our balance: which bill do I pay first?

Rather than make hard choices, raising the debt ceiling has been an easy way of dealing with the budget. And despite the finger pointing between Democrats and Republicans, there’s enough blame to go around: we’ve raised the ceiling ten times in the past ten years.

Now, Congress is crying, “Uncle!” and saying no more raises.

Which sounds good in theory, right? At some point, we just have to decide that enough is enough.

But failing to raise the debt ceiling means that we can’t borrow any more money. Again, maybe a good thing. But here’s the problem. Right now, we have outstanding (read: not new) bills to pay and defaulting on those bills just can’t happen.

As I see it, that leaves us with three options:

• Raise more revenue;
• Raise the debt ceiling; or
• Invade Canada and take over their Treasury.

One of those options is far less painful than the others (eh?).

Of course, yes, we can cut spending. Cutting spending at this point is clearly an option that needs to be on the table. But again, that’s kind of like cutting up your Macy’s credit card at this point. Putting the brakes on spending going forward makes sense but it won’t erase your existing debt. And at this point, it’s not just a Macy’s bill. It’s a lot of bills. Just to make it through to the next fiscal year – which starts October 1 – we’d have to eliminate several hundred billion dollars of spending. And that’s coming from… where?

I won’t be the one to suggest that we will have to raise taxes. Nobody wants to be that guy. For politicians, it means you’ll never, ever get elected; for everyone else, it means that people will write nasty comments on your blog. Besides, House Majority Whip Kevin McCarthy has already said that tax increases are completely off the table.

So, we can’t make deep enough cuts to stave off the deadline. And we’re not going to raise taxes. And Congress doesn’t want to boost the debt ceiling because that looks bad on paper  with an election coming up. We’re kind of running out of options.

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Today, kids will decorate wagons with streamers and drag them down small town streets while big marching bands play John Philip Sousa tunes. There will be floats and beauty queens with big smiles (and even bigger hair). Smells from cookouts and barbecues will fill neighborhoods as folks fire up the grill to make hotdogs, hamburgers and pulled pork. Picnic tables will groan underneath the weight of piles of cole slaw, potato salad, baked beans, fresh tomatoes out of the garden and spectacularly decorated red, white and blue cupcakes. Grown ups will kick back a few beers as kids run around with glasses of freshly squeezed lemonade. Politicians will make speeches and kiss babies. Fireworks will light up the night sky.

All over the country, folks will have a fantastic day. It will be classic Americana.

And then we will all go to bed and forget that it all happened.

That last part will be a shame. Not just because those memories are really lovely memories to hold onto (and they are) but because the Fourth of July is pretty darn important. And we shouldn’t forget that.

You see, on July 2, 1776, our Congress (the then Continental Congress) acted in a manner in which they haven’t for awhile: they were bold, decisive and courageous. They voted to declare independence from Great Britain. At the time, King George III ruled Great Britain and by extension, the colonies.

Great Britain had gotten itself into quite a pickle after the Seven Years’ War which had been expensive to fight. As a result, Britain needed to raise revenue – and quickly. What better way than a series of taxes and tariffs?

The first in the series, the Stamp Act of 1765, required that materials which were printed and used in the colonies, like magazines and newspapers, be produced on stamped paper and embossed with revenue stamp. The revenue stamp indicated that a tax had been paid on the materials. The idea of the tax didn’t go over very well and the act was repealed the very next year.

Britain tried again a year after the repeal by passing a series of acts which came to be known as the Townshend Acts of 1767. Individually, they were known as the Revenue Act of 1767, the Indemnity Act, the Commissioners of Customs Act, the Vice Admiralty Court Act and the New York Restraining Act. The idea behind the series of taxes, after the failure of the Stamp Act, was to try a system of indirect taxes since the colonists had reacted so strongly to the direct stamp tax. However, the result was no different. The colonists were not pleased with the new system which required them to pay taxes on imports of paper, paint, lead, glass and tea; opposition started the same year. Three years after the taxes were imposed, they were partially repealed.

One of the pieces of the Townshend Acts of 1767 that stayed, the tax on tea, became glaringly obvious as a result of the Tea Act. The Tea Act, passed in 1773, did not actually impose any new taxes on the colonies. It was actually a means of keeping the East India Tea Company in business by limiting the source of tea to the colonies. Together with the Townshend Act, the colonists viewed this as yet another source of control from King George, resulting in the infamous Boston Tea Party.

The stage had been set for a revolution.

Here’s what really irked the colonists: under the British Constitution, no British subjects could be taxed without the consent of their representatives in Parliament. But the colonies didn’t elect representatives to Parliament. The colonists considered the constant imposition of taxes on them under those circumstances to be unconstitutional. It was, they felt, “taxation without representation.”

Many colonists worried that the attempts to impose taxes would only get worse. They decided to do something about it. Led by Thomas Jefferson, they penned a letter – a declaration of their rights – to be delivered to the King. On July 4, 1776, the day we officially celebrate Independence Day, the wording of the Declaration of Independence was approved by Congress. It was printed out and handed out to the public (in many different languages) and read out loud. Out loud. It was that important. And here’s what it said:

The unanimous Declaration of the thirteen united States of America,

When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.–That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, –That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.–Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government. The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.

He has refused his Assent to Laws, the most wholesome and necessary for the public good.

He has forbidden his Governors to pass Laws of immediate and pressing importance, unless suspended in their operation till his Assent should be obtained; and when so suspended, he has utterly neglected to attend to them.

He has refused to pass other Laws for the accommodation of large districts of people, unless those people would relinquish the right of Representation in the Legislature, a right inestimable to them and formidable to tyrants only.

He has called together legislative bodies at places unusual, uncomfortable, and distant from the depository of their public Records, for the sole purpose of fatiguing them into compliance with his measures.

He has dissolved Representative Houses repeatedly, for opposing with manly firmness his invasions on the rights of the people.

He has refused for a long time, after such dissolutions, to cause others to be elected; whereby the Legislative powers, incapable of Annihilation, have returned to the People at large for their exercise; the State remaining in the mean time exposed to all the dangers of invasion from without, and convulsions within.

He has endeavoured to prevent the population of these States; for that purpose obstructing the Laws for Naturalization of Foreigners; refusing to pass others to encourage their migrations hither, and raising the conditions of new Appropriations of Lands.

He has obstructed the Administration of Justice, by refusing his Assent to Laws for establishing Judiciary powers.

He has made Judges dependent on his Will alone, for the tenure of their offices, and the amount and payment of their salaries.

He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance.

He has kept among us, in times of peace, Standing Armies without the Consent of our legislatures.

He has affected to render the Military independent of and superior to the Civil power.

He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation: For Quartering large bodies of armed troops among us: For protecting them, by a mock Trial, from punishment for any Murders which they should commit on the Inhabitants of these States: For cutting off our Trade with all parts of the world: For imposing Taxes on us without our Consent: For depriving us in many cases, of the benefits of Trial by Jury: For transporting us beyond Seas to be tried for pretended offences: For abolishing the free System of English Laws in a neighbouring Province, establishing therein an Arbitrary government, and enlarging its Boundaries so as to render it at once an example and fit instrument for introducing the same absolute rule into these Colonies: For taking away our Charters, abolishing our most valuable Laws, and altering fundamentally the Forms of our Governments: For suspending our own Legislatures, and declaring themselves invested with power to legislate for us in all cases whatsoever.

He has abdicated Government here, by declaring us out of his Protection and waging War against us.

He has plundered our seas, ravaged our Coasts, burnt our towns, and destroyed the lives of our people.

He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation and tyranny, already begun with circumstances of Cruelty & perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.

He has constrained our fellow Citizens taken Captive on the high Seas to bear Arms against their Country, to become the executioners of their friends and Brethren, or to fall themselves by their Hands.

He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless Indian Savages, whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions.

In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Prince whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people.

Nor have We been wanting in attentions to our Brittish brethren. We have warned them from time to time of attempts by their legislature to extend an unwarrantable jurisdiction over us. We have reminded them of the circumstances of our emigration and settlement here. We have appealed to their native justice and magnanimity, and we have conjured them by the ties of our common kindred to disavow these usurpations, which, would inevitably interrupt our connections and correspondence. They too have been deaf to the voice of justice and of consanguinity. We must, therefore, acquiesce in the necessity, which denounces our Separation, and hold them, as we hold the rest of mankind, Enemies in War, in Peace Friends.

We, therefore, the Representatives of the united States of America, in General Congress, Assembled, appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in the Name, and by Authority of the good People of these Colonies, solemnly publish and declare, That these United Colonies are, and of Right ought to be Free and Independent States; that they are Absolved from all Allegiance to the British Crown, and that all political connection between them and the State of Great Britain, is and ought to be totally dissolved; and that as Free and Independent States, they have full Power to levy War, conclude Peace, contract Alliances, establish Commerce, and to do all other Acts and Things which Independent States may of right do. And for the support of this Declaration, with a firm reliance on the protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes and our sacred Honor.

—

Have fun today. But remember why we’re celebrating. Happy Fourth of July!Similar Posts:

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