November 5: Beardsley Ruml

Bet you never heard of him, but he has had an enormous impact on your life.
Today is the birthday of Beardsley Ruml. He was a statistician (and devised
aptitude tests for the army), was a Dean at the University of Chicago,
became Chairman of Macy's, President of the Federal Reserve Bank of New
York, and an advisor to FDR.

He is the guy who devised the tax-withholding system. So the taxes that get
withheld from your paycheck, or estimated taxes you pay, are due to him.
The withholding system was adopted by Congress in 1943.

Some history: prior to 1942, only about 7% paid income taxes. The war
required more revenue. In 1942, the Revenue Act was passed, that lowered
income thresholds for paying taxes and also raised tax rates, adding may
more people to the tax rolls.

This led to another problem: people were not used to paying taxes, and at
the end of the year, many did not have any money to pay. Ruml suggested
that they pay in installments. This was adopted in 1943. But there was
still a problem with collecting the 1942 taxes. The solution, also proposed
by Ruml, was to forget those, just start the tax collection process in 1943.

So anyway, today is the birthday of Beardsley Ruml, the father of the "pay
as you go" tax system we have in place today.