Chances are that you are spending today gathered around a grill or trying to soak in some sun. Labor Day weekend is considered summer’s last hurrah and ushers in fall and, including, in areas like mine, the beginning of the school year.
(You can read more about the tie-in to the school year and Labor Day weekend here.)
But Labor Day is actually less about sunshine and beaches than… offices and factories. Here’s a little Labor Day history mixed with tax trivia:
- The holiday falls on the first Monday in September each year. The earliest national recognition of Labor Day happened on June 28, 1894, when President Grover Cleveland signed a law making it a national holiday. The date was made official as part of a law signed by President Johnson on June 28, 1968, to “provide for uniform annual observances of certain legal public holidays on Mondays, and for other purposes.”
- The U.S. income tax – as we know it today – didn’t exist in 1894. Instead, Congress pushed through the Revenue Act of 1894, also called the Wilson-Gorman Tariff of 1894, considered the country’s first peacetime tax. It was a flat tax of 2% on corporate and individual income over $4,000 (about $120,512.09 in today’s dollars). The following year, the tax was found to be unconstitutional in Pollock v. Farmers’ Loan & Trust Co., 157 U. S. 429 (1895), and affirmed in Pollock v. Farmers’ Loan & Trust Co., 158 U. S. 601 (1895). For several years following, there was no formal federal income tax until 1913 when the Sixteenth Amendment to the federal Constitution was ratified, giving Congress the power “to lay and collect taxes on incomes.”
- The idea for what is a leisurely holiday today was actually inspired by less restful events. The American Industrial Revolution (sometimes called the second Industrial Revolution) quickly grew the American economy – spurred on by the expansion of the railroads. But it also came at a price. American workers toiled up to 12 hours a day, seven days a week. An influx of immigrant workers, women, and due to the relative absence of child labor laws, children, worked for lower wages in mills and factories. Labor unions demanded change and began organizing strikes rallies. By summer’s end in 1882, there was a call for a “working man’s holiday” as a public show of solidarity.
- To counter the waves of immigration, that same year, Congress passed the Immigration Act of 1882, which levied a head tax “for every passenger not a citizen of the United States” arriving by steam or sail vessel from any foreign port. The tax was fifty cents per person payable to the U.S. Treasury and deposited into the “immigrant fund.” The Act also blocked (or excluded) the entry of any “convict, lunatic, idiot, or any person unable to take care of himself or herself without becoming a public charge.” The latter group mostly consisted of single women.
- We’re not quite sure who came up with the idea of Labor Day. Some say it was Matthew Maguire, secretary of the Central Labor Union of New York, who proposed the holiday (he’s credited with saving the first parade – read on). Others claim that it was Peter J. McGuire, general secretary of the Brotherhood of Carpenters and Joiners and a co-founder of the American Federation of Labor. McGuire is also considered the father of May Day, the international Labor Day.
- The Central Labor Union eventually broke up, and many former members rejoined as the American Federation of Labor (AFL), now the American Federation of Labor and Congress of Industrial Organizations (AFL–CIO). The AFL was founded in 1886, and the CIO was founded in 1935. The two merged in 1955. Today, the federation represents 12.5 million working men and women in 55 national and international labor unions. It is supported by a per capita tax on affiliated unions and organizing committees (yes, it’s really called a tax).
- The first Labor Day holiday was celebrated on Tuesday, September 5, 1882, in New York City. In 1887, Colorado, Massachusetts, New Jersey, New York, and Oregon created the Labor Day holiday in their respective states. By 1894, most states had adopted the holiday, and on June 28, 1894, Congress passed an act making the first Monday in September of each year a legal holiday in the District of Columbia and the territories.
- You may know that a federal holiday typically means a tax holiday (extra day to file and pay) for taxpayers. But a statewide legal holiday only delays a due date for filing a federal income tax return if the Internal Revenue Service (IRS) office where you’re required to file is located in that state. For individuals, a statewide legal holiday also delays a due date for filing a return for residents of that state. But, a statewide legal holiday doesn’t delay a due date for making a federal tax deposit.
- The first Labor Day parade almost didn’t happen. When it came time to start the parade, Grand Marshall William McCabe and a few dozen marchers were in place, but there was no music. They started out, intending to walk a few blocks when Mathew Maguire of the Central Labor Union of New York ran over to advise that 200 marchers from the Jewelers Union of Newark Two had just crossed the ferry and they had a band. They kicked off the tunes with “When I First Put This Uniform On” by Gilbert and Sullivan. By the end, reports of the total number of marchers ranged from 10,000 to 20,000 (more showed up for the after-party).
- Taxpayers sometimes foot the bill for parades and other gatherings in towns and municipalities. Some governments charge a fee to cover the cost of special services during these events. Still, not everyone is comfortable passing along the expense – especially to non-profit organizations that arrange for the festivities. There are also First Amendment issues. Famously, a unanimous Supreme Court ruled in Cox v. New Hampshire, 312 U.S. 569 (1941) that while the government cannot regulate speech in parades or gatherings, it “may charge a license fee reasonably adjusted to the occasion, for meeting administrative and police expenses.”
- I grew up believing that you can’t wear white after Labor Day (in the South, it’s a considerable fashion sin). How that evolved is somewhat controversial. According to Valerie Steele, director of the Museum at the Fashion Institute of Technology, it was marked a social divide, separating those with old money from new money, with “insiders trying to keep other people out… and outsiders trying to climb in by proving they know the rules.” Or it could be something more logical: with the end of summer, it was time to put away breezy white dresses and vacation-oriented clothes in favor of more suitable work clothing which tended to run darker, like navy suits and gray sweaters.
- Like fashion rules, tax rules for clothing can vary depending on the state (or locality) and clothing type. There are special exemptions and definitions (what exactly is an accessory in Pennsylvania anyway?) which control whether and how much your clothing will be taxed at purchase. Fortunately – so far as I know – the color of your garb isn’t one of those factors.