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

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.

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[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.)