The Washington herald., 1911-11-27
SAYS OLEO DEALERS
EYADE THE LAW
Revenue Commissioner R. E.
Cabell FaVOrs Flat Tax.
WOULD LIMIT SIZE OF PACKAGE
He Tells How UnscrupuIous Mer-
chants Defraud Both Customers
and the Government-AIso Calls
Attention to Needed Revision of
Opium Law-word on Pensions.

Royal E. Cabells Commissioner of In
ternal Revenue. in his annual report,
tells an interesting story of how oleo-
margarine dealers evade the law to sup
port his plea for a complete revision
Of the oleo and opium laws. He asserts
that smoking opium Is a widespread evil
in the United States.
He advocates the abolition of the dou-
bic rate of taxation imposed under the
oleomargarine laws and the adoption OF
fiat rate. Urging that manufacturers
be prohibited from handling oleo except
in one-half TO five-pound packages, the
commissioner asserts the tobacco pack
age and stamp laws are the best yet
devised and should be applied to oleo.
In this connection the Commissioner
says:
Big Loss to Government.
Had the tax on oleomargarine been
cents a pound during the past fiscal year
instead of a nominal rate of 10 cents and
an actual rate OF one-fourth cent a
pound, the revenues would have been in
creased by s1.7a3. .1OO.7s. a large sum ex-
pended IN attempting to enforce the pres
ent statutes would have been saved. and
the corruption OF great numbers OF Amer
lean citizens. as we'll as a fraud upon
| dreamed of, would have been prevented.
1t is earnestly hoped that Congress will
take acton in this matter during the
coming session"
After pointing out that the law assesses
tax of 10 cents a pound on oleo, except
when free from artificial coloring, when
the tax is 4 cent a pound, the commits
sioner gives the following description Of
how the law is evaded:
Evasion of the Law.
Under the law the oleomargarine is
permitted to be packed by the manufac-
turers and sold in large firkins, or tubs.
containing about sixty pounds, with a
stamp on the outside showing tax pay
ment. The retail dealer would buy a
small number OF tubs of artiicially col
ored oleomargarine, tax paid at 10 cents a
pound. He would then buy large num-
bers of tubs, tax paid at Il cent q pound.
He would pay the special tax as a dealer
in colored oleomargarine. The stamp on
the tubs does not have to be destroyed
until the tub is empty, and the courts
have held that a tub is not empty as long
as any merchantable oleomargarine re-
mains therein. The retail dealer, there
fore, would sell from his tubs OF the COL
ored product, and the product would be
sold as butter, and when a certain num-
ber of tubs would be nearly empty the
dealer would remove them, together with
a corresponding number OF tubs tax paid
at the lower rate, to a place securely
guarded and mix little coloring matter
in the white goods. refill the tubs in
which had been colored oleomargarine.
destroy the stamps on the tubs emptied
of their white contents, take the refilled
tubs back to his place of business, and
continue selling therefrom.
by this simple process, the retail
dealer, with practical immunity from
detection, because the oieomargarine
laws do not provide the summary rem
edies allowed government officers in en-
forcing other internal revenue laws, can
add 92 cents to every pound thus manip-
ulated. and, by furnishing this to his
customers when they call for butter. he
is enabled to dispose of his product.
which cost him from II to Is cents a
pound, at from % to 40 cents a pound.
Temptation to Fraud.
The comparative immunity from de-
lection and punishment and the great
financial profit have proved sufficient in
ducement TO cause thousands of other
wise reputable grocers. market men, and
dealers to engage in the nefarious bust
ness of defrauding the government of
on their customers. 1t is confidently be-
lieved the oleomargarine law is at this
time corrupting and debauching more
taxpayers and affords the opportunity
for greater fraud upon the public than
any other statute with which the In
ternal Revenue Bureau has to deal"
Mr.. Cabell asks that provision be made
for pensions of 5000 for widows or de-
pendents of officers killed in the line of
duty, and also for the care of an officer
injured in like manner during his in
capacity. He further urges an increase
for collectors.
Receipts of the bureau for the fiscal
year amounted to $322, ,526, ,299. 73. OF this
$2S9, OLA TAB was from ordinary sources,
an increase of $2O.Ol7, 1851 over the previ-
GUS fiscal year. The special excise tax
on corporations brought in S33, 3,511,525, an
increase Of S12,55l,741.36.