7 Strange Tax Code Quirks
Ah, spring. The birds are singing, the trees are blooming, and all is right with the world. Or all would be right with the world, if not for tax season.
Every year, millions of Americans struggle with finding all their receipts, checking deductions, trying to figure out what exactly a withholding allowance is—and, in some cases, how many of those whaling weapons can be deducted as a charitable contribution. Here are seven curiosities from the history of taxation—some still on the books, some very much not.
1. Twix are food but Snickers are candy in Illinois.
In what is surely one of the few times the merits of Twix versus Snickers have been mentioned in a Supreme Court decision, in his dissent for the 2018 case South Dakota v. Wayfair, Inc., et al., Chief Justice John Roberts noted that “Illinois categorizes Twix and Snickers bars—chocolate- and-caramel confections usually displayed side-by-side in the candy aisle—as food and candy, respectively (Twix have flour; Snickers don’t), and taxes them differently.”
And he was correct. In Illinois, candy by definition “does not include any preparation that contains flour or requires refrigeration” [PDF], which means a Snickers (flourless) has a 6.25 percent tax, and, thanks to the flour, a Twix has a tax of 1 percent. (Even more surprisingly, the Chicago Tribune reports that Twizzlers aren’t considered candy for tax purposes due to their flour content. But Beer Nuts are). So if you're in Illinois, have a hankering for chocolate, and want to save some cash, opt for a Twix.
2. Antiperspirants are over-the-counter drugs in Texas.
Candy wasn't the only topic on Roberts's mind in his South Dakota v. Wayfair, Inc., et al. dissent. As a way of illustrating the challenges that web-based businesses face when navigating quirky state and local tax laws, he cited another state-defined differentiation: “New Jersey knitters pay sales tax on yarn purchased for art projects, but not on yarn earmarked for sweaters,” and “Texas taxes sales of plain deodorant at 6.25 percent but imposes no tax on deodorant with antiperspirant” [PDF]. Why? Antiperspirants are classed as over-the-counter drugs.
3. Engraving something of "no special value" meant no special taxes in the 19th century.
The importance of scouring the tax laws for details is nothing new. According to an 1863 list of decisions of the Commissioner of Internal Revenue, engravers had to have a license and pay a manufacturers tax. But only if they were making “general seals, stamps, or dies, which possess a commercial value.” If, however, the engraver only did work for a “specific purpose, so that it would be of no special value to any one but the owner” they were “not thereby a manufacturer under the law.” So if you were to get a stamp of, say, your cat, which you would only use around your house, the engraver wouldn't have to pay tax.
4. Certified whaling captains get a hefty deduction.
Although it might seem very 19th century, current U.S. tax law allows a deduction for captains of whaling boats. But not just anyone can go out and hunt a whale (or claim the $10,000 deduction). The IRS only allows whaling captains recognized by the Alaska Eskimo Whaling Commission (AEWC) to take the deduction, and the AEWC is granted a quota by the International Whaling Commission because of the importance of whaling for cultural and nutritional reasons (and because, unlike industrial whaling operations, subsistence hunters aren’t motivated by profit). Perhaps most surprising is that it’s deducted as a charitable contribution [PDF].
5. Deer hunters in Maryland can get a tax credit if they're charitable.
It’s much easier to get a license to hunt deer than whales, but hunters in Maryland can still get some tax credits. According to the state, “Individuals who hunt and harvest an antlerless deer in compliance with State hunting laws and regulations” can donate the meat to a program to feed the hungry. To offset the costs of butchering and processing, the state allows a credit of up to $50 of qualified expenses (up to $200).
6. Drinking despite England's "War Tax" on beer was one way to "help your country."
In 1915, future British Prime Minister David Lloyd George is said to have remarked “We are fighting Germans, Austrians and drink, and so far as I can see the greatest of these deadly foes is drink.” In November of 1914, as part of that fight, a “war tax” was implemented on beer, tripling the duties on a barrel of beer. One enterprising brewer advertised, “Order a pint of beer and drive a nail into the Kaiser’s coffin. If you can’t manage a pint order a half-pint and drive a tin-tack. Drink the national beverage and help your country by paying your share in the war-tax.”
According to Robert Duncan, author of Pubs and Patriots: The Drink Crisis in Britain During World War One, the alcohol tax had many positive effects: yearly beer consumption fell from 35.1 million bulk barrels to 21.4, and spirit consumption fell by half. Meanwhile, liver cirrhosis deaths decreased by 64 percent, from 152 per million to 56 per million.
7. The "Chicken Tax" requires a high tariff on light trucks.
Before 1962, the Common Market (a forerunner of the EU) was a rapidly growing market for American chicken producers. But that year, tariffs on poultry increased almost 200 percent, which meant a 66 percent decrease in the export of American chickens.
Americans balked, not just for the honor of our chicken farmers but because of concerns that this was an opening salvo on trade wars with the Common Market. In response, President Johnson implemented tariffs on trucks (to hurt Germany), brandy (to hurt France), and potato starch (to hurt the Netherlands), among other products.
Today, most of the tariffs have been lifted, but the so called “Chicken Tax”—a "25 percent tariff on light trucks," according to Jalopnik—remains on the books.