Now I Know More (27 page)

In the spring of 1987—if you ask government accountants, at least—roughly 7 million American children vanished without a trace. Seven million, gone. According to a report by the Scripps Howard News Service in 1990, at least 400 people were being investigated for crimes relating to the disappearance of these children.

The criminal conspiracy of the century? Hardly. Just some garden-variety tax fraud.

The U.S. federal income tax law is a muddled, 70,000-plus-page mess of rules and requirements. One of the better-known rules, though, is that parents can claim their children as “dependents,” since the children rely on the adults for sustenance, shelter, and basically everything else. Claiming your children as dependents will save you some money when tax season comes around. (The allowance is so well known that it's not uncommon for obstetricians to half-jokingly tell expectant parents that they're better off having their new arrival come before the first of the upcoming year, so the child counts in the current tax year.) The quick math takeaway: more children equals less taxes.

But if your budget-balancing strategy is to have more kids, well, that's a pretty horrible idea. Kids are expensive—they cost more than the tax money they'll save you, easily. So some people, apparently, decided to lie to the government instead. Thousands of people wrote down that they had children, getting some relief from Uncle Sam in the process, and just pretended that the kids existed. Hey, free money, right?

That all changed when Congress passed the Tax Reform Act of 1986. One of the provisions required that if you claimed a person over the age of five as a dependent, you had to include his or her Social Security number on your tax filing. Just like that, 7 million children formerly claimed as dependents no longer were.

While some of those children actually existed—perhaps the parents hadn't, wouldn't, or couldn't apply for a Social Security number for them—there's good reason to believe that in many cases fraud was the order of the day. The IRS commissioned a study to find out where all the children had gone, and the results were startling. At least 60,000 families claimed four or more dependent children in 1986 and then, in 1987, claimed none at all. Even more egregious: more than 11,000 tax filers claimed at least seven (seven!) fewer children than they had the year prior. Nearly 5 percent of those 11,000 faced criminal charges for what constituted obvious fraud.

Most of the “missing” children were, therefore, never found. But the IRS found something else—$2.8 billion in additional taxes collected, compared to the prior year.

Social Security has been part of the American economic and political landscape since its inception in August 1935. As part of the New Deal, President Franklin Delano Roosevelt signed into law the Social Security Act, which aimed at alleviating poverty among senior citizens, as at the time, roughly 50 percent of them were living below the poverty line. Social Security created a tax on payrolls, the revenue from which would be used to pay monthly benefits to seniors, as well as a lump-sum payment upon death.

In order to create this system, the federal government created Social Security Numbers (SSN)—unique identifiers that allowed the system to track all the collections and payments. Unfortunately, as we know today, identity theft is rampant, in part because the SSN system does little to protect our numbers from becoming available to anyone. Take the case of Hilda Schrader Whitcher, whose SSN was used by 5,755 people in the year 1943, alone.

But Whitcher was not the victim of identity theft thousands of times over. Rather, her number was given out in wallets.

In 1938, just a few years after the Social Security Act became law, a wallet manufacturer decided to include sample cards in their leather products, encouraging purchasers to use their new wallets to carry around Social Security cards. (As it turns out, this was bad advice; the Social Security Administration
advises
that you not carry around anything with your SSN on it.) The cards were labeled with the word “specimen” so as to not confuse the wallet's new owner into thinking that the card provided contained a true SSN. Whitcher was the secretary of the executive who came up with the fake-card idea, and it was her number—078-05-1120—that was emblazoned on the sample card.

The wallet was a retail success, finding distribution across the country when Woolworth, at the time the biggest single retail chain in the nation, decided to carry it. Unfortunately, as Whitcher would later find out, thousands of people began using her number as their own—sparking all sorts of inconveniences for her, including a visit from the FBI. In total, roughly 40,000 people have claimed SSN 078-05-1120 as their own since the fake cards were first printed. This misuse went on for decades. As recently as 1977—nearly forty years after it was first placed on sample cards—Whitcher's number was still being used by about a dozen people.

While Whitcher and Woolworth learned the “do not make documents with fake SSNs, even as samples” rule the hard way, another organization did not heed their lesson. In 1962, this organization printed a pamphlet aimed at answering common questions about how the Social Security system works, and on the front of the pamphlet was a picture of a card with a sample number—219-09-9999. That number was, of course, erroneously adopted by confused pensioners and employees alike. But the embarrassing part?

The organization that published the pamphlet was the Social Security Administration.

Let's make a couple of assumptions. First, let's assume that birthdays are randomly distributed—given enough people, you'll have roughly the same number born on, say, December 13 as you will on November 22 or April 14. (As it turns out, this isn't quite true.) Second, let's assume that February 29—Leap Day—doesn't exist. (Also untrue.) Finally, let's assume that everyone uses the 365-day Gregorian calendar. (Mostly true.) Got it? Nothing too controversial.

Say you walk into an empty auditorium. A minute or so later, someone else walks in. Given the previous assumptions, there's a 1 in 365 chance (0.27 percent) that this person shares your birthday. A second person walks in a minute or two later. The odds of you sharing a birthday with either jump to about 0.55 percent. A third and a fourth and—you get the idea. Only when the 253rd person walks in do you have a 50 percent chance of having the same birthday as someone else in the room. It isn't person 182 or 183, because some of the first 200-something people may share birthdays with each other. So a birthday shared with person 254 (including you) should make intuitive sense—or, at least, not be terribly shocking.

But let's look at it a different way. Again, you start off in an empty auditorium and again, every few minutes, someone new comes into the room. Instead of wondering if
you
share a birthday with anyone else in the room, let's make this about
everyone
in the room. Let's ask: “Do any two people in the room share a birthday?” The math starts off the same—with two people, there's still a 1-in-365 chance. The third person? The odds aren't 0.55 percent anymore—now, there's a 0.82 percent chance that anyone in the group matches someone else. Yes, you could share a birthday with either of the other two people—that's the 0.55 percent—but they could share a birthday with each other, too. That's where the extra percentage boost comes from.

How many people before we hit a 50 percent chance that any two share a birthday? Twenty-three. Not 230. Twenty-three. Here's a graph:

The odds go up very quickly because each new person can match every other person in the room, and as the number of people in the room grows, the gains are huge. At fifty-seven people, there is just over a 99 percent chance of any two people in the room sharing a birthday. And, in case you are wondering, at 124 people, there is less than a 0.0000000001 percent chance of there
not
being a match. That's one in one hundred trillion.

The song is iconic: “
Happy birthday to you
,” twice. “
Happy birthday
” (again) followed by the birthday boy or girl's name. And again, to close, “
Happy birthday to you
.”
The Guinness Book of World Records
(as of 1998) says that “Happy Birthday” is the most recognizable English-language song in existence, followed by “For He's a Jolly Good Fellow” and then “Auld Lang Syne.” But unlike the second and third most recognizable English songs, “Happy Birthday” has another distinction: It is under copyright.