ARTICLE: Learning from F.Scott Fitzgerald's Tax Returns

[Ryan Goble]

A cross post from the American Lit group that might inspire some ID work!

I would be interested to see if this article -"Living on $500,000 a Year: What F. Scott Fitzgerald's tax returns ...- would resonate with HS kids. They might not know enough about family income and taxes to get into it. What do you think?

It is short and would be a great article/line of inquiry to collaborate on with an economics or social studies teacher for an interdisciplinary Gatsby unit. If you're a F. Scott fan (I am a big one) it is a must read.

Some highlights...

What can be learned from Fitzgerald’s tax returns? To start with, his popular reputation as a careless spendthrift is untrue. Fitzgerald was always trying to follow conservative financial principles. Until 1937 he kept a ledger—as if he were a grocer—a meticulous record of his earnings from each short story, play, and novel he sold. The 1929 ledger recorded items as small as royalties of $5.10 from the American edition of The Great Gatsby and $0.34 from the English edition. No one could call Fitzgerald frugal, but he was always trying to save money—at least until his wife Zelda’s illness, starting in 1929, put any idea of saving out of the question. The ordinary person saves to protect against some distant rainy day. Fitzgerald had no interest in that. To him saving meant freedom to work on his novels without interruptions caused by the economic necessity of writing short stories. The short stories were his main source of revenue.

The publication of This Side of Paradise when he was 23 immediately put Fitzgerald’s income in the top 2 percent of American taxpayers. Thereafter, for most of his working life, he earned about $24,000 a year, which put him in the top 1 percent of those filing returns. Today, a taxpayer would have to earn at least $500,000 to be in the top 1 percent. The 1920 census reported the American population as 106,021,537. That year only roughly 7 percent of the population—7,259,944—even filed tax returns. Today, about 45 percent of the population files returns: 134,000,000 returns out of a population of 300,000,000.

If we accept a 20-times measure, the modern equivalent of Fitzgerald’s annual income would be roughly $500,000. But a person earning $500,000 today does not live as well as Fitzgerald did. First, Fitzgerald’s income was almost tax free (5.5 percent effective rate), while today’s taxpayer making $500,000 would probably pay 40 percent in income and Social Security taxes. Second, various social changes have reduced the availability of servants—Fitzgerald had many—and has made having them so expensive that only the very wealthy can afford them. During the 1920s and 1930s, an upper-middle-class family generally had servants.

Read the whole story HERE.