“Let me tell you about the very rich. They are different from you and me.” — F. Scott Fitzgerald, “The Rich Boy,” 1926
St. Paul native and famed American author F. Scott Fitzgerald wrote about the rich and those aspiring to be in the 1920s. He made a lot of money himself and spent a lot, or so the legend goes.
Now his income and spending have been as carefully deconstructed as his prose, thanks to a trove of Fitzgerald’s tax returns and financial records covering his entire working life, and they show … well, the “old sport” wanted to save but just couldn’t seem to hang onto a buck.
The current issue of The American Scholar Magazine, examines two decades of Fitzgerald’s tax returns and financial records. Fitzgerald’s daughter, Scottie, gave the records to Matthew Bruccoli, a noted Fitzgerald biographer and a trustee for a fund benefitting Scottie’s children. Upon Bruccoli’s death last year, friend and collaborator William Quirk was left with the task of writing an article the two had planned to co-author about the tax returns.
The publication of “This Side of Paradise” in 1920 “immediately put Fitzgerald’s income in the top 2 percent of American taxpayers,” Quirk reports. “Fitzgerald’s annual income was remarkably consistent, although some years were better (1938, $58,783) and some worse (1931, $9,765). But most years were pretty close to $24,000 … 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.”
An honest taxpayer
Among the observations, Fitzgerald was a meticulous record keeper and an honest taxpayer, and he had hoped to save but could not comprehend how, despite careful budgeting, “leakage” drained his accounts. The returns also show how little the noted Jazz Age author earned in his lifetime from the novels he is now best remembered for.
Fitzgerald “kept a ledger — as if he were a grocer — a meticulous record of his earnings from each short story, play, and novel he sold,” Quirk writes. “The ledger for 1919 shows earnings from short-story sales of $879, an amount below that required for a tax return. But the next year Fitzgerald was suddenly rich. In 1920 he earned $17,055 and paid $1,444 in taxes — an overall effective tax rate of about 8 percent.”
While acknowledging that budget-busting trips to New York drained his accounts, Fitzgerald also blamed price-gouging tradesmen and pocket-lining servants. But still he could not account for all his spending.
“You don’t mean to say that every month we lose $1,000?” Quirk reports Fitzgerald lamenting in 1924: “People don’t lose $12,000 in a year, it’s just missing.” Somehow, a “mysterious third of our income had vanished into thin air.”
In addition, Fitzgerald’s wife, Zelda, became ill in 1929, remaining in poor health for the rest of their lives. Quirk reports that “in 1930-31, a 15-month stay for Zelda in a sanatorium on Lake Geneva cost $13,000. He [Fitzgerald] felt obliged to provide the best care, but because of doctor and sanatorium bills, he lost hope of controlling his finances.”
Over Fitzgerald’s working life, he reported a total of $449,713 in gross income, and he paid $24,666 in taxes — thus the effective tax rate of 5.5 percent. Most of his earnings ($386,383) came from his 160 short stories and, later, movie scripts. His best novels, “The Great Gatsby” (1925) and “Tender Is the Night” (1934), did not produce much income during his lifetime.
“Fitzgerald, had he relied on the income from the novels, would have had to live on less than $5,000 a year — a good income for the time but not suitable for Fitzgerald,” Quirk reports.
And despite his hard drinking and hard partying ways, Fitzgerald also remained an honest taxpayer, according to Quirk. At a time before W2 forms or withholding taxes, when less than 10 percent of the population filed tax returns, all on the honor system, “Fitzgerald reported every dollar he had entered in his ledger. He was impeccably honest in his reporting,” Quirk writes.
But the author also pushed the IRS on some of his deductions, “On his 1924 tax return, he deducted $2,450 as a business expense for a ‘trip to Europe for the purpose of obtaining material for stories, etc.’ ” Quirk recounts. When the IRS objected to the deduction, Fitzgerald relented.
A modest estate
When he died in December 1940 of alcoholism, Fitzgerald’s estate “was solvent but modest — around $35,000, mostly from an insurance policy. The tax appraisers considered the copyrights worthless. Today, even multiplying Fitzgerald’s estate by 30, it would not require an estate tax return,” Quirk concludes.
Biographer Bruscolli, in a 1992 anniversary edition of “The Great Gatsby,” recounted the tragic irony of Fitzgerald’s economic life. “Commercially the novel [“Gatsby”] was a disappointment to Fitzgerald … The first printing of slightly over 20,000 copies sold slowly.”
A second printing of 3,000 copies did not sell well either, “and when Fitzgerald died fifteen years later (1940) here were still unsold copies … The novel was never out of print; it had simply stopped selling … Royalties from ‘The Great Gatsby’ totaled only $8,397 during Fitzgerald’s lifetime … Today ‘Gatsby’ is read in nearly every high school and college and regularly produces $500,000 a year in Scottie’s trust for her children.”
“F. Scott Fitzgerald died believing himself a failure,” Bruccoli wrote. “The obituaries were condescending and he seemed destined for literary obscurity. The first phase of the Fitzgerald resurrection … occurred between 1945 and 1950. By 1960 he had achieved a securing place among America’s enduring writers.”