What caused 7 million children to vanish in 1987?

The US Federal Income Tax Code requires tax payers to be responsible for their own taxes (income, deductions, and forms). As of 1987, tax filers were now required to report a Social Security Number (SSN) for all dependents over the age of 5. Listing phony dependents in order to claim extra deductions has historically been one of the more common forms of tax fraud, so it makes sense the IRS would always have wanted to track such information as closely as possible.

Once 1987 tax returns rolled around, a grand total of 7 million children disappeared from tax roles of the previous year. Altogether this represented almost 10% of the previous year's dependents and about $2.9 billion more in yearly tax revenue.

About 66,000 taxpayers who claimed four or more dependents for 1986 claimed none for 1987, after the Social Security identification rule went into effect. And more than 11,000 families claimed seven or more dependents for 1986, but none for 1987.

Another fun fact was that in 1989 the US government went a little further, and started checking into child daycare credits. This year, not just children had disappeared into thin air, but 2.6 million babysitters also vanished as well. This represented about $1.2 billion in taxes from the 2.6 million families who stopped taking the dependent-care credit in 1989.

It may be time again for a serious revamp of the US Tax Code especially the tax exemptions. Some are promoting the so called "Fair Tax".