Happy Birthday, President Washington! Okay, it’s not really George Washington’s birthday (that’s February 22), but each year, we celebrate the birthday of our first president in February. Congress made it a federal holiday beginning in 1879, and the date was officially moved to the third Monday in February as part of a law signed by President Johnson on June 28, 1968, to “help Americans to enjoy more fully the country that is their magnificent heritage.”
I know what you’re thinking: What about the rest of the presidents? They’re not officially included in today’s celebration and never have been by federal law. We tend to think of Presidents’ Day as honoring the birthdays, collectively, of Presidents Washington and Lincoln, but that’s not the case. President Lincoln was born on February 12 but his birthday was never declared a federal holiday. Attempts to combine the two into one day, like “Washington and Lincoln Day” or “Presidents’ Day” were not successful.
Rep. William Moore McCulloch (R-OH) noted, about efforts to change the name:
It was the collective judgment of the Committee on the Judiciary that this [naming the day “President’s Day”] would be unwise. Certainly, not all Presidents are held in the same high esteem as the Father of our Country. There are many who are not inclined to pay their respects to certain Presidents. Moreover, it is probable that the members of one political party would not relish honoring a President from the other political party whether he was in office, no matter how outstanding history may find his leadership.
To this day, only Washington’s birthday remains an official federal holiday.
But what about those sofa sales? And car sales? You can thank retailers for those. Remember that 1968 holiday law? Included in the explanation for the bill was this nugget: “The Monday holiday will stimulate greater industrial and commercial production, sparing business and labor the penalty of midweek shutdowns.”
The economy was a factor in the decision to push for a Monday holiday (rather than simply Washington’s actual birthday) which might explain why a number of business-related organizations including the Chamber of Commerce of the United States, the National Association of Manufacturers, the National Association of Travel Organizations, and the National Retail Federation, helped push the law through. In the years to come, realizing the power of holiday spending, marketers began to use the term Presidents’ Day to tout sales over the three-day weekend. Today, we say it without even a second thought, even though no such federal holiday exists (some states, however, do observe an official Presidents’ Day).
Since the modern-day version of the holiday is so closely aligned with consumer spending, I thought it would be fun to look at the flip side: government revenue. Here are ten quick facts about tax and our presidents:
1. Our modern-day federal income tax system was created by the Revenue Act of 1913, which was signed into law by President Woodrow Wilson on October 3, 1913.
2. Presidential compensation is set by statute (it’s currently $400,000) and it is subject to tax. As of 2016, the salaries of the Vice President and members of Congress weighed in at $230,700 and $174,000, respectively. The Speaker of the House pulled in $223,500, and the House Majority & Minority Leaders received $193,400.
3. Our modern-day federal estate tax was created by the Revenue Act of 1916, which was signed into law by President Wilson. However, a number of presidents had advocated for the tax, including President Theodore Roosevelt, who declared:
As a matter of personal conviction, and without pretending to discuss the details or formulate the system, I feel that we shall ultimately have to consider the adoption of some such scheme as that of a progressive tax on all fortunes, beyond a certain amount either given in life or devised or bequeathed upon death to any individual — a tax so framed as to put it out of the power of the owner of one of these enormous fortunes to hand on more than a certain amount to any one individual; the tax, of course, to be imposed by the National and not the State Government.
4. Social Security numbers were first issued by the Social Security Administration in November 1935. The numbers were created to help administer President Franklin D. Roosevelt’s New Deal Social Security program, officially called the Social Security Act. The purpose of the act – coming off of the Great Depression – was to provide benefits to retirees, the unemployed, certain children and the disabled. As now, payments from the program were financed by a payroll tax on wages, half of which was withheld from an employee’s check (now 6.2%) and the other half of which was in the form of a contribution from the employer (now 6.2%). That framework has pretty much held steady throughout time except for the Medicare piece (now 1.45% for employers and employees) which was tacked on in the 1960s.
5. While President Trump has declared the recent tax cuts the “largest in history,” most historians agree that the largest tax cuts were those made during the Economic Recovery Act of 1981 by President Reagan. They didn’t remain in place for too long: many of this 1981 cuts were rolled back in 1986. The result was the Reagan Tax Reform Act, a reform effort that was so dramatic that the Tax Code was renamed the Internal Revenue Code of 1986.
6. President Ronald Reagan paid tax in 1981 at an effective rate of 40%, the highest paid by any president from Nixon to Obama.
7. Taxes have long been a policy issue tackled by presidents and presidential candidates. In 1988, at the Republican National Convention, President George H.W. Bush would declare, “Read my lips: No new taxes.” After he was forced to raise taxes during his presidency, his words would come back to haunt him in the next election.
8. That infamous “I am not a crook” comment from President Nixon? Contrary to popular belief, it wasn’t directed at Watergate. While defending allegations that he had not paid his taxes, Nixon told reporters, “People have got to know whether or not their President is a crook. Well, I am not a crook.” Nixon agreed that he paid “nominal” income taxes in 1970 and 1971 but didn’t say much more. Ultimately, the Internal Revenue Service (IRS) did not charge Nixon with a crime but did find that he had underpaid hundreds of thousands of dollars in tax.
9. Since the 1970s, most presidents (and recent candidates for president) have chosen to make their tax returns public. You can click through number of them at the Tax History Project managed by Tax Analysts.
10. As for President Trump’s tax returns? According to former IRS Commissioner John Koskinen, President Trump’s tax returns are “in a locked cabinet in a locked room that nobody’s in. You’ll need a key to the room and the cabinet to get it. We’re in the process of turning that cabinet into a safe.” But it’s not just for President Trump. According to Koskinen, “We keep all the returns from every president in there.”