Typographic errors have always been pretty common ever since the advent of the typed word. But sometimes, these miniscule grammatical errors can cause huge losses. One such typo that took place in the American legislature eventually proved very costly to the government.
In 1872, one misplaced comma in a tariff law cost American taxpayers more than $2 million. The amount may seem trivial today, but adjusting for the inflation, the same $2 million dollars are equivalent to $38,350,000 in today’s dollars, reported Priceconomics.
In the old days, our government raised revenue a bit differently. After the United States gained independence from the British in 1776, it tried to economically reorganize itself through the establishment of a national budget. Thirteen years later, George Washington signed the Tariff Act of 1789 into effect, stipulating that “duties be laid on goods, wares and merchandise” in order to “support the government.”
These tariffs were succeeded by Income Tax, but after eight short years, the government decided to bring back the Tariff Act. The revised thirteenth Tariff Act was the first to come post-Civil War, which sought to reduce rates on many manufactured goods in order to get the economy back.
But instead of supporting the economy, one minuscule typo ended up costing the government and Civil War taxpayers, nearly $2 million. The typo happened in the ‘Free’ list which essentially exempted specific items from being taxed upon entry to the United States, reported Now I Know.
Since all foreign imports generally averaged a tax of around 20 percent of the good’s purchase price, importers always looked for ways to weasel lower fees on their goods. They voraciously scanned new tariff acts when they were released in hope of discovering loopholes.
Now, till 1870, the tariff acts had specified that “Fruit plants, tropical and semi-tropical for the purpose of propagation or cultivation” were exempt from paying the import tariff. In other words, the seeds and the plants were exempt from import duty, but the actual fruits weren’t.
In the 1872 revision, a comma was, for some inexplicable reason, inserted between the words “fruit” and “plants,” giving fruit importers the means of evasion they’d been looking for.
Needless to say, the legislature meant to insert a hyphen, but the clause ended up including the mention of ‘fruit’ as an individual category. This resulted in importers demanding the duties paid as refunds. Initially, the Secretary of the Treasury rejected these claims on the grounds that the grammatical error was “clearly intended to read otherwise”. But the importers strongly resisted and eventually the U.S. Government had to relent and refund the taxes collected to the tune of $2 million.
A loss of $2 million was nearly 1.3% of the government’s total tariff income in 1875 ($157.2 million) and 0.65 percent of that year’s entire federal budget ($308 million)!
[Image Credit | FBII, Priceonomics]