ARTICLE

Beardsley Ruml, author of federal tax deductions

Cedar Rapids native, Beardsley Ruml, developed the federal pay-as-you-go tax deduction plan in 1943.

Beardsley Ruml, Cedar Rapids native, developed the federal pay-as-you-go tax deduction plan in 1943. He was also treasurer and eventually chairman of the board of R.H. Macy's in New York, and helped establish the International Monetary Fund and the World Bank.
Beardsley Ruml, Cedar Rapids native, developed the federal pay-as-you-go tax deduction plan in 1943. He was also treasurer and eventually chairman of the board of R.H. Macy's in New York, and helped establish the International Monetary Fund and the World Bank.

Each time you see the federal tax deduction on your paycheck, think of tax economist and Cedar Rapids native Beardsley Ruml, who authored a method of tax payment called "pay-as-you-go" that was adopted by Congress in the Tax Payment Act of 1943.

Wentzle and Frances Ruml moved to Cedar Rapids in the mid 1880s with their children Wentzle Jr. and Annie. Wentzle Ruml Jr. was old enough to hold a job and began work as a clerk for Dr. Henry Ristine. Four years later, he began his medical studies in Chicago. In May of 1891, Wentzle became a partner in the medical practice of Dr. Ristine and his son John M. Ristine.

Established in his practice, Dr. Ruml married Laura Salome Beardsley in Buchanan, Mich., on Nov. 30, 1893. On Nov. 5, 1894, their first child, Beardsley Ruml, was born.

Beardsley grew up to attend Cedar Rapids' only high school, Washington. An old annual from Ruml's 1911 graduating class identified him as its editor. Ruml and his classmates hung out at Jones Pharmacy on First Avenue, Calamity Bill's on Third Avenue, and the Palace of Sweets on South Second Street, where kids could spend a nickel for their favorite ice cream soda.

Ruml headed for Dartmouth in Hanover, N.H., the following fall. He graduated in 1915 and received his doctorate from the University of Chicago in 1917.

By 1918, Ruml had a wife and child and was working for the government in personnel service in Poughkeepsie, N.Y. They lived in Haverford, Pa.

Carnegie Corp. President Dean Angel appointed Ruml as his assistant in 1920. Angel had been the head of the psychology department at Chicago University when Ruml was doing his postgraduate work there.

The Laura Spelman Rockefeller Memorial foundation lured him away from Carnegie in 1922. The Memorial had $74 million to disburse that year and needed a plan for doing it. Ruml, as director, worked with the fund's trustees to build three programs: social science, interracial relations, and child study and parent education, the latter benefiting a program at the University of Iowa.

From there, Ruml became dean of the social science department and professor of education at the University of Chicago in 1931, leaving there in 1933 to join the R.H. Macy Co. Inc. in New York as vice president and treasurer.

While at Macy's he was adviser to the National Resources Planning Board, National Bureau of Economic Research, the Division of Cultural Relations of the State Department, Committee for Economic Development and Business Committee on National Policy of the National Planning Association. He served on the board of directors of the Federal Reserve Bank of New York. He was recognized as a brain-truster for the government but received little public attention until his "pay-as-you-go" plan emerged.

Up to that point, federal taxes were levied on less than 20 percent of the country. With the expense of World War II, Washington was struggling with how to meet the country's budget. Lowering the tax base to include more people raised millions, but collections only happened at the end of the year. Ruml devised a way to get a constant stream of income through the year by collecting the federal income tax with each pay period. Implementation was the obstruction. The only way to implement the plan smoothly was to "forgive" the current year's taxes and start fresh.

The Ruml plan originally was defeated in Congress in 1943, but the plan was popular and Congress began feeling the pressure of public opinion. Even the Cedar Rapids South Side Civic Club was unanimously behind it, according to a Gazette article. The club sent telegrams to Washington urging support. "It was a striking fact that this club, composed almost entirely of men of moderate income, expressed itself as believing that the Ruml plan was not designed -- as its opponents have charged -- to give special benefits to the millionaire or multimillionaire, but was devised to lift an almost unbearable load from the ordinary, average citizen."

Ruml, who went by "B" in lieu of his first name, was described in 1943 by a writer for the Coe Cosmos as a heavyset man for whom "thinking is both business and recreation." He loved comfort, saying, "Nobody can think if he's not comfortable."

He was considered a great abstract thinker, who loved to engage in good conversation and debate. He expressed his distaste for exercise, saying, "Exercise is like dope; once you start taking it, you can never stop."

A Current Biography magazine article in May 1943 said, "Unconventionality is one of Ruml's chief characteristics. In the country he wears pastels -- an orchid corduroy jacket and dove pink trousers, and among friends he sometimes wears brilliant Russian pheasant blouses. Well acquainted with classical and modern art, classical music and opera, his favorite topic of conversation is, nevertheless, his work. 'Why not?' he asks. 'That's the best entertainment in a man's life. If it isn't, he's in the wrong job.'"

Ruml played a leading role in a conference of monetary experts from 41 countries that met in 1944, leading to the establishment of the International Monetary Fund and the World Bank.

Ruml served as chairman of the board at R.H. Macy & Co. beginning in 1945. He resigned July 30, 1949, at the close of the fiscal year.

He still was active in a number of activities, among them helping form the National Citizens Commission for the Public Schools in May 1949. The commission received financial support from the Carnegie Corp. and the General Education Board.

When Ruml died on April 19, 1960, he was still serving on the boards of eight companies.Comments: (319) 398-8338; diane.langton@sourcemedia.net

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