Celebrating Our 65th Year
I can speak for all of the staff at the Tax Foundation that we have had a memorable year celebrating the 65th Anniversary of our founding. We’re grateful for the numerous letters from alumni, scholars and public officials congratulating us on achieving this remarkable milestone.
In June, we were thrilled to receive a letter from President George W. Bush praising the importance of our work to the national debate:
“Throughout its history, the Tax Foundation has worked to conduct research and educate the public about our Nation’s economic health and tax burdens. I commend the members and supporters of the Tax Foundation for your dedication to the issues that affect our prosperity and quality of life.”
Majority Leader Dick Armey cited our work as essential to his efforts to reform the tax code:
“As a conservative economist, tax reform is an issue that I hold near and dear to my heart. During my years in congress, I have fought hard to reform the tax code, reduce government spending, and lessen the tax burden on working Americans. And I am grateful for the vast assistance and support that the Tax Foundation has provided over the years in the battle for reform.”
But the letter that touched me personally arrived just recently from an old friend, Gordon Paul Smith, who is perhaps one of the biggest fans of our annual book Facts and Figures on Government Finance. In the mid-1940s, Gordon landed his first job out of graduate school as a junior analyst at the Tax Foundation. Like so many of the young scholars who cut their teeth at the Tax Foundation, Gordon’s experiences would last him a lifetime.
“I reflect on the wonderful memories of the close relationships I had and enjoyed with the Foundation beginning over a half century ago. As a young man fresh out of graduate school joining the Tax Foundation as a member of its research staff, it was the Foundation who, without any doubt, truly set the course for my career in business and government ever since. I am grateful. Always have been.”
The standards that guided Gordon Smith more than 55 years ago are the same standards that guide us today.
The official birthday of the Tax Foundation is December 5, 1937, when the Foundation was formally organized at a meeting in New York City. But the seeds for starting this unique institution were actually planted at an informal lunch at New York’s University Club in 1935, where a small group of national business leaders met, pondered, and agreed that a new presence was needed in America to monitor the tax and spending policies of all levels of government–state, local, and federal.
In that group of Founding Fathers were Alfred P. Sloan, Jr., Chairman of the General Motors Corporation; Donaldson Brown, GM Financial Vice President; William S. Farish, President of Standard Oil Company of New Jersey; and Lewis H. Brown, President of Johns-Manville Corporation, who later became the first Chairman of the Board of the Foundation.
In some respects, the concerns that our founders had over the size and scope of government seem almost quaint today. The national debt back then was only $37 billion, and federal expenditures were only $3.1 billion. True, New Deal programs were in high gear, and by 1937, the combined tax burden at all levels of government had risen from 9.9 percent of the nation’s income to 15.9 percent in just 8 years. But in 2000, the total tax burden reached 33.3 percent, before dropping to 32.1 percent this year.
The first goal of the Tax Foundation was to assemble a team of experts who would gather factual data on government finances, publish this information in readable form, and then encourage grassroots groups of citizens to organize their own state and local groups to mount sustained tax and government efficiency drives in their communities. By 1943, there were approximately 1,200 local taxpayer groups and 35 statewide groups in operation. As a result of this early activism, the Tax Foundation can be credited for helping to create the modern taxpayer movement.
The key to the Tax Foundation’s success has not only been the credibility of our work, but our ability to turn mountains of data into simple concepts that real Americans can relate to their daily lives. During the 1950s, for example, we began calculating the “Tax Bite in an 8-hour Day,” a simple way of illustrating how long people have to work to fulfill their tax liability. Another Tax Foundation fact-based illustration entitled “A Hundred Taxes on a Loaf of Bread” captured the attention of President Dwight Eisenhower, who quoted it extensively during speeches at the time. According to one observer, that simple illustration aroused “more consciousness about tax burdens than a thousand tables of statistics.”
Of course, since 1972, our annual calculation of Tax Freedom Day® has been the gold standard by which average taxpayers, and their lawmakers, track government’s take of their paychecks. In 2000, Americans worked longer than ever (until May 1st) to pay their tax bill. But thanks to the Bush tax cuts – shepherded through Congress by Ways and Means Chairman Bill Thomas, the Tax Foundation’s 2002 Distinguished Service Award Winner – Tax Freedom Day arrived four days earlier this year, on April 27.
With Washington abuzz with speculation about the prospects for major tax reform or simplification legislation next year, we are already hard at work preparing research to contribute to that debate. As Nobel Laureate James M. Buchanan wrote us: “The Foundation has continued to serve the indispensable function of providing unbiased tax information. Keep up the good work. And, who knows, we may, once again, some day get meaningful tax reform.”