Happy Tax Day! (Unless You Live in MA or ME)

Brigham Young, c. 1870

Brigham Young, c. 1870

Most years (at least when I remember), I like to do a Tax Day post.[fn1] (And yes, I get that Tax Day statutorily falls on April 15 for calendar year taxpayers, and I get that April 15 was Friday. But Friday was also the observation of Emancipation Day in D.C., which pushed Tax Day to today. Except in Massachusetts and Maine, where today is apparently Patriots’ Day, which means Tax Day is tomorrow.)

For this year’s Mormon-y Tax Day celebration, we’re going back to the Civil War-era income tax. It only lasted a decade, from 1861-1871, but, in that time, it managed to ensnare itself with the Mormons out in Utah. 

In 1870, the New York Times reported that John Taggart had assessed an income tax of $39,559 against the church, as well as an additional penalty of $19,779.50. (That would be about $1 million in 2016 dollars.)

The church argued that (a) its revenue came from tithing, which amounted to voluntary offerings, and was therefore not taxable, and (b) the law exempted the income of every “five persons living in religious communities holding property in common.”

The Bureau of Internal Revenue agreed with Taggart and against the church (though it did eliminate the penalties). I haven’t run down all (or, really, any) of the details, so I’m not sure about the specific arguments, but the idea of an exemption for communitarian religious individuals piqued my interest. And I was able to partly run that down.

Brigham Young was referring to section 8 of the Revenue Act of 1870.[fn2] And this is what section 8 says (with some relevant language bolded):

And be it further enacted, That . . . the sum of two thousand dollars of the gains, profits, and income of any person[] shall be exempt from said income tax, in the manner hereinafter provided. Only one deduction of two thousand dollars shall be made from the aggregate income of all the members of any family composed of one or both parents and one or more minor children, or of husband and wife . . . . For the purpose of allowing said deduction from the income of any religious or social community holding all their property and the income therefrom jointly and in common, each five of the persons composing such society, and any remaining fractional number of such persons less than five over such groups of five, shall be held to constitute a family, and a deduction of two thousand dollars shall be allowed for each of said families.

I’m not exactly sure what Brigham Young was arguing as he invoked section 8. Section 8 basically gave every nuclear family an exemption amount of $2,000 (meaning, basically, that a family could earn up to $2,000 without owing any income tax). It also provided that communitarian religious groups would use any five-person unit in lieu of a family for purposes of the exemption.[fn3]

I’m not sure how Brigham Young read that to exempt the Mormon church from paying taxes (though, in all fairness, it was a secondary argument—I suspect he believed he’d win on the first. And, in all likelihood, absent the Eastern suspicion of all things Mormon, he probably would have). However he got where he did, though, in the end, the church was on the hook for a significant tax bill.

[fn1] I haven’t asked the Mormon Lectionary Project folks if they’re interested in adding Tax Day to their liturgical calendar yet, but little by little, maybe I’ll build my case for its inclusion.

[fn2] 16 Stat. 256, 258 if you’re interested.

[fn3] I suspect that this was intended to provide some sort of fair treatment to the Shakers, who believed in both holding all property in common and in celibacy and, therefore, would not likely have had husband, wife, and children.

So why a special provisions for the Shakers? Presumably, without nuclear families, each and every member of the Society of Friends United Society of Believers in Christ’s Second Appearing would be able to take the $2,000 exemption, meaning they would pay far less in taxes than groups that didn’t practice celibacy. (Of course, I haven’t (yet) done the legislative history research, so consider that a working hypothesis.)

Comments

  1. Last Lemming says:

    Brigham’s first argument sounds like a winner to me.

    Incidentally, the Shakers are the United Society of Believers in Christ’s Second Appearing. The Society of Friends is the Quakers.

  2. Thanks; I’ve corrected it in the post.

  3. Brigham Young’s summary of the affair for the mission leaders at Liverpool, summer of 1870:

    You will doubtless remember that early this spring, Dr Taggart Assessor of Internal Revenue for the district of Utah, assessed, at random, a tax amounting to nearly Sixty thousand Dollars, on the Tithing paid to the Trustee in trust, for the year 1868. Mr Hollister the collector of Internal Revenue by direction of the department afterwards carefully examined my books, and forwarded a lengthy report to his superiors at Washington, stating that in his opinion the tax should be reduced to between Four and Five thousand Dollars Since that time Congress has passed a law to the effect that for the future no Income tax shall be collected on the common fund of any community, if the amount of that fund is not in excess of One thousand Dollars for each and every family of five persons. This law is made retrospective in its action so as to include all unpaid taxes of this nature, at the date of its passage – July 14th 1870 – This of course affects the attempted taxation of our tithing; that, as you are well aware, in the aggregate, is but a very small fraction of two hundred dollars, per annum, for each Latter-day Saint. Thus, in this, as in all other things, the Lord has caused the right to triumph, and the vexatious attempt to tax our tithing has fallen through, and our enemies have in this case as in every other of their righteous attempts been checkmated.

  4. LL, his first argument sounds good to me, too. But I don’t know the Civil War income tax well enough to know if that would have been the right answer.

    And Ardis, thanks! It’s great to see Brigham Toung’s reaction.

  5. Great fun Sam.

  6. Thanks, Sam (and comments so far). I’m puzzled by the numbers. You report a $2,000 per family exemption amount (for a family, and for 5-person “families” for a church). The Brigham Young quote (thanks, Ardis) mentions “One thousand Dollars for each and every family of five persons”, but also that tithing in the aggregate was a “very small fraction of two hundred dollars, per annum, for each [person].” Obviously the numbers don’t match up, but also it would seem that the exemption amounts should have zeroed out any tax due without more, meaning why was there a case in the first place? Or was there a claim that contributions by large families (actual persons > 5 and large enough to be over the exemption amount) were to be taxed? Was this in practical effect a proposed tax on contributions by the Young (Brigham) and Kimball (Heber) families, that were large and wealthy (in a local sense)?

  7. Christian, great questions. As for the dollar amount, I believe that there was a $1,000 exemption prior to 1870, and it was upped to $2,000 in the 1870 legislation (though I could be wrong on that).

    As for what was going on overall: I’m really, really curious. Both Brigham Young and John Taggart have letter repositories that I’d love to go through sometime to see if I can figure out what’s actually going on. In the meantime, though, I’ve merely whetted my appetite for this, and I certainly hope I’ve whetted others’ appetites, too.

  8. I’ll chime in here for part of this, if you don’t mind, Sam.

    Taggart didn’t get his income figures from any return filed by the Church. Taggart’s calculation of tax due was based on his estimate of total value of Utah agriculture, industry, mining, etc. — as if every person in Utah were a faithful Mormon and paid a full tithing on everything. Taggart’s numbers and Brigham’s numbers don’t match because, even if Taggart’s estimates of Utah production were correct, obviously not every person in Utah (especially miners) was a Mormon, and not every Mormon paid a full tithe. Even if the Church (or Brigham personally, because he, rather than the Church, was billed by Taggart for tax due) owed tax on every penny of tithing actually paid, Brigham’s point was that the tax bill would be vastly below Taggart’s estimates because actual Tithing Office records showed that the average tithing paid was >$200 per person.

  9. Er, please change my angle there — it should be <$200 per person.

  10. Thank you Ardis!

  11. Last Lemming says:

    So while Brigham’s “at random” comment is not strictly true, it might as well be given the assessment’s relationship to any potentially taxable value (and that’s assuming tithing receipts were truly taxable in the first place).

  12. Jason K. says:

    Fn1. Dying.

  13. Kristine says:

    Hey–at least there’s a good hymn for Tax Day: “The Time is Far Spent”

  14. Kevin Barney says:

    That’s some real chutzpah to try to assess an income tax based on those assumptions.

  15. chutzpah, yes. However, while I do not know anything about 19th century tax jurisprudence (and those taxes were repealed anyway), under the modern income tax it is said that the IRS has “great latitude” in reconstructing the income of a taxpayer that files inaccurate returns or fails to file. Taggart might just squeak by on a prima facie case for income, leaving the taxpayer (the Church or Brigham Young) to argue a better income computation, and deductions and exemptions, and to present books and records to prove it. [Tax protestors, take note.]

  16. Thanks, Christian! That’s a really insightful observation; it could be that Taggart was information-forcing. Presumably, believing the church (or he) didn’t owe taxes, Brigham Young didn’t file any kind of tax return. And, per Ardis’s Brigham Young citation, he ultimately argued his (or the church’s) case, and got the ultimate tax bill reduced to something he found much more acceptable and in line with reality. If that’s the case, Taggart’s construction of taxable income, as far-fetched as it may have been, actually was successful in collecting the appropriate amount of revenue from the church.

  17. Don’t be too quick to assume that Taggart was just doing his job as a thoughtful, conscientious officer of the government. He was one of the Mormon-eaters who came to Utah with the railroad, and was at the head of the “Federal Ring” in Utah (it’s worth Googling that if you’re unfamiliar with it; most of the western territories had them — Mormon Utah wasn’t the only place under prolonged attack from this Republican machine, the Western equivalent of the post-war carpetbaggers in the South), and everything he did in Utah was calculated to build his own political power and personal fortune at the expense of everyone else. Almost immediately upon arrival in Utah, and before the tax issue arose, he was looking for a weapon to break up the Church, and was one of the supporters of the Godbeite movement. Francis M. Lyman, writing to a friend in 1869, told of how Taggart recruited Lyman’s father, Amasa M. Lyman, to join the Godbeites and use his influence as an apostle to become its leader:

    Dr. Taggart certainly had an interview with Father, and I am very happy that I can say that I was there too; and I did not sleep while they were “interviewing.” If you were not already well enough acquainted with Dr. Taggart I would tell you that I know him to be one of our bitterest enemies; and if Father had kicked his back-side instead of being “interviewed” by him, it would have pleased me much better. Their interview lasted perhaps an hour and a half, and that time was mostly occupied in reading the discourse you mentioned. Taggart wanted to get the discourse, and said he could not get a copy of it in Salt Lake City. Father would not let him have it, but read it to him. That Father is “the man to take the lead of the apostate clique,” may be the opinion of John P. Taggart; but that “he is ready and expects to be the head of the apostate Church &c.” is as base a lie as Dr. Taggart is capable of inventing.

    This tax matter is only one of many attempts by Taggart become a major power in Utah, and was not a simple matter of a bureaucrat doing his job in a professional, impersonal way. He was a corrupt, conniving, manipulative schemer who came to Utah to make his fortune.

  18. it's a series of tubes says:

    With every word, Ardis drops knowledge.

  19. MDearest says:

    I was busy finalizing actual tax paperwork and errands yesterday, which made me late to the party. (again) But I’m edified by reading this post and comments, not just for the clarity on obscure BY history, but also for the real reason for the current tax deadline change. Thanks again BCC!

  20. Ardis, many thanks for the history. You say “it’s worth Googling” but I can assure you that your comments to this post comprise 99% of what I know about Taggart even after Googling. (Maybe I need new search skills?)
    If I may, do you understand Taggart as solely after “political power and personal fortune at the expense of everyone else”? It seems likely that Mormons viewed him as particularly or especially anti-Mormon (as opposed to all pro-Taggart). But maybe it was just happenstance that his work was at the expense of Mormons.

  21. Christian, as a carpetbagger, he probably would have carried out his personal-enrichment agenda regardless of which territory he was granted his patronage position in, adapting his actions to the weaknesses and personnel he found wherever he might have been assigned.

    His actions quickly took a decidedly anti-Mormon turn in Utah, though. That is, he didn’t just squeeze every nickel he could get from every resident indiscriminately. In the example I’ve used above with the Lyman quotation, Taggart sensed the theological schism in the making with the Godbeites — and it was theological, not merely commercial; the sermon he wanted from Amasa Lyman was one he had given in Scotland in 1862 that redefined the mission of Jesus Christ in a decidedly heretical way, leading directly, if only after several years, to Lyman’s excommunication as an apostate — and Taggart encouraged the theological schism as a wedge split the Church and break its influence in Utah.

    Taggart made reports to his Washington superiors — false, it should go without saying — that as a Gentile he had been the target of an assassination attempt by Mormons (that may have started as a joke when he explained some blood on his shirt when he cut his finger on his suspenders, but when somebody took his statement seriously he promoted the story as an actual thing). Time after time, he played upon religious prejudice both in Utah and in the East. He wasn’t just a moneygrubber; he was an anti-Mormon moneygrubber.

    I’m not sure why you’re resisting the idea of his having anti-Mormon attitudes. He was not an ordinary civil servant. He was a leader in the effort to centralize political power in a small circle of federal appointees from Washington, to control the expenditure of federal funds coming into Utah and deny a local voice in the use of those funds, to promote military rule in Utah, to disfranchise Mormon voters — and he exploited every religious and social prejudice imaginable to promote his ends. He was not a good man.

  22. Ardis, thanks.
    I don’t know where you got the idea that I’m resisting the idea of anti-Mormon attitudes. Maybe “that guy over there” but not me. It is true that whenever I hear a story from one point of view I wonder and ask whether there’s another version, and there usually is. But mostly I just know very little and ask questions.