Tax talk involving Washington, and his monumental colleagues, on George’s 293rd birthday
Monday, February 17, 2025
Happy birthday, George! That’s the officially correct take on this Monday federal holiday.
Although it’s now popularly known as Presidents (or Presidents' or President's; the apostrophe apparently is optional and mobile) Day, the correct designation for today is Washington’s Birthday.
America's first president was born on Feb. 22, 1732, and Washington’s actual birthdate was the holiday until 1968. That’s when the Uniform Monday Holiday Act, mandating most federal holidays occur on Mondays, was formally shifted to the third Monday in February.
The name, however, was not changed by that law. Still, the proximity of Lincoln’s birthday on Feb. 12, and the duo’s sharing of Mount Rushmore space with two other presidential legends, is seen as one reason many started called the Washington Birthday holiday Presidents’ Day.
Good old-fashioned American commerce then popularized it as yet another reason to entice shoppers into their stores.
And that, conveniently, brings us to taxes.
Since only five states don’t collect a statewide sales tax, then all of today’s discount purchases will help out treasuries. Cities and counties in most states also will get their sales tax cut.
It’s also a good day to look at some tax connections of the Mount Rushmore commanders in chief.
Washington's whiskey tax: In 1791, President Washington’s Treasury Secretary Alexander Hamilton proposed what seemed to be an innocuous excise tax "upon spirits distilled within the United States, and for appropriating the same." The excise tax on spirit distillers, argued Hamilton, was necessary to pay off the American Revolution’s debts, and the spirits industry was one of the few mature enough to shoulder the levy.
Washington and Congress agreed on the need for the new tax. So did a begrudging Jefferson, then Secretary of State, who accepted his rival Hamilton's plan in exchange for moving the nation’s capital from Philadelphia to Washington, D.C., closer to his Monticello estate in Virginia.
The young country's original alcohol tax was designed to raise $800,000 through a levy of 7 cents to 18 cents per gallon. Hamilton’s proposal also created an internal revenue service to collect it.
But the tax adversely affected farmers with small stills more that the mass producers. The farmers paid taxes as if they were running their stills 24 hours a day year-round, while the large producers paid a flat tax, making their cost per gallon of liter of whiskey distilled was much lower.
And that led to a domestic tax crisis for the country's first president, who had famously opposed Britain's taxation of the American colonies.
Whiskey riots, Jefferson tax repeal: The Whiskey Rebellion soon erupted, with residents living in Western Pennsylvania testing the new federal government’s authority.
They refused to pay the spirits tax, attacked the tax collectors, and broke into collectors' homes, even setting fire to one residence.
By 1794, the resistance threatened the young United States’ stability, forcing President Washington to personally lead a U.S. militia force of almost 13,000 to the western frontier stop the rebels.
By the time Washington and his troops arrived in Pittsburgh on Oct. 24, 1794, most of the rioters had quieted down or dispersed.
However, around 150 men were arrested. Ultimately, most legal cases were hampered by lack of evidence. Washington pardoned two Whiskey Rebellion participants who were convicted.
And when Jefferson became the country’s third president in 1801, he repealed what had become known as the whiskey tax, as well as all other internal taxes. Overall, Jefferson advocated for fairness in business and supported levying taxes for the sole purpose of public works.
Teddy Roosevelt’s tax troubles: That Mark Twain quote about history rhyming rather than repeating also could apply as far as our current Oval Office occupant's tax travails and another native New Yorker, Theodore Roosevelt, who had his own well-publicized tax issues back in the day.
Houghton Library, Harvard University via National Park Service
Before becoming the 26th U.S. president in 1901, the Rough Riders’ leader found himself in 1898 publicly shamed for failing to pay New York personal property taxes.
“Still worse, the scandal erupted as Roosevelt was launching his campaign for New York governor, nearly ending the bid before it began,” writes Joseph J. Thorndike, a recognized historian of U.S. fiscal and economic policy and director of the Tax History Project at Tax Analysts, in an article for Tax Notes.
Thorndike elaborates —
Roosevelt described his tax controversy as “a peculiarly ugly business,” reflecting on his character in ways he found intolerable. “I hated to have any combination of incidents make me look for a moment as if I were doing something shifty,” he wrote to his friend Henry Cabot Lodge.
And the scandal did exactly that; “it exposed him to the charge of tax dodging,” wrote historian G. Wallace Chessman, “a most embarrassing thing for a reformer and a moralist.”
In the end, rather than hurting Roosevelt’s political future, Thorndike notes a Chessman observation that the tax scandal might actually have helped Roosevelt: “It bolstered his reputation for a certain kind of naiveté — one that voters found appealing.”
Lincoln, father of the income tax: Finally, there is Honest Abe, whose Feb. 12 birthday, while not a holiday, is cited as one reason for expanding Washington’s nearby, calendar-wise, official birthday celebration.
As far as taxes, Lincoln deserves special recognition. As our 16th president, Lincoln was the father of our current U.S. tax system. Or maybe that's why he doesn’t get his own solo holiday.
In 1862, President Lincoln signed into law a revenue-raising measure to help pay for Civil War expenses. The measure created a Commissioner of Internal Revenue and the nation's first income tax.
The 3 percent tax was levied on incomes between $600 and $10,000. The progressive tax feature also was started, with the new tax collecting 5 percent tax on incomes of more than $10,000.
This first income tax was repealed in 1872. It returned for good in its modern form in 1913. That year, with World War I looming, Wyoming became the 36th and last state needed to ratify the 16th Amendment.
The amendment stated, "Congress shall have the power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration."
Later, Congress adopted a 1 percent tax on net personal income of more than $3,000 with a surtax of 6 percent on incomes of more than $500,000. It also repealed the 1909 corporate income tax. The first Form 1040 was also introduced.
The next time you visit Mount Rushmore, or at a party where’s that a lull, you can wow those in your group with the tax tidbits that also connect these four U.S. presidents.
On second thought, maybe you just save it for the South Dakota monument visit. The other option might get you dropped from future guest lists.
You also might find these earlier Washington Birthday posts of interest:
- Presidential taxes, personal & for us all, on Presidents Day (2018)
- Reviewing key tax changes, and the presidents that championed them, on Presidents Day 2021
- How taxes have — and haven't — changed since JFK became the first president to visit IRS headquarters (2016)
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