The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1916-04-27
(By Basil VI. Manly, Noted American
Economic Investigator.)

Cleveland, April 27.-Now that 1
have shown the United States treasury
Is being robbed of $500, 900 income
taxes annually. largely because the
law creating the income tax is itself
defective, let us examine the admin
istration of this inadequate law.
The collection of the income tax is
entirely in the hands of the internal
revenue bureau, and its success as a
revenue source depends entirely upon
the efficiency of this bureau.
The bureau of internal revenue is
not yet an efficient machine for col
lecting the income tax.
IN the first place, until the creation
of the income tax. the bureau was
trained entirely in dealing with tangi-
bic properties. 1t had to find so many
barrels of whisky and beer and see
that the tax was paid, to sell so many
stamps and keep a check on the tobac-
60 and oleomargarine markets This
did not require a high order of ability
simply enough men to keep a close
watch over the entire country. 1t
seems fair to say that no large amount
OF tax evasion was possible without the
collision of the revenue officers.
Evidence Meagre and Deceptive.
With the income tax. particularly
the personal tax, the situation is en-
must deal entirely with intangible in
come of which the evidences are mea-
ger and often deceptive. Brains, i'm
agination. and wide knowledge of af-
fairs is necessary for its successful
administration.
The collection of the old excise taxes
was policeman's job; the income tax
is worthy of the best efforts of Sher-
lock Homesi
This fact seems to be realized in
only a small measure either by con-
gress or the majority of officials in
the bureau.
IL is a striking fact, illustrative of
the policy of the federal government
that no man in the income tax di-
vision Of the bureau is paid enough
salary to be subject to the income tax.
There are a few men who are worth
more than the maximum salary but
they must all look outside government
service for their reward. These are
the men whom Uncle Sam pits against
the shrewdest business men, the most
Skilful accountants, and the cleverest
lawyers in the country
Detection of Fraud Rests on II Clerks
In the personal tax division the de-
tecton OF fraud and evasion rests en-
tirely upon the acumen of eleven ST.
sou clerks, who examine the returns
rom the entire country. If the return
looks "fishy'' to one of these clerks it
viii be referred to a revenue agent
Tor examination. but if it is we'll bal
anced and cleverly constructed so that
all the items appear reasonable, no
question VIII ever be raised, though it
may cost the government $4,000 in
taxes, Any skillful accountant can
construct return for any except the
best known of the multi-millionaires
that would exempt him entirely from
the tax and not stand one chance in a
hundred of detection
secretary McAdoo says he has plans
now under way which will furnish
means of detecting and Furnishing
frauds, If congress will give him the
necessary appropriation.
Here is what the secretary of the
treasury must do in order to carry out
his promise:
First he must card index all infor-
nation contained in the lists of stock
holders to which his agents have ac-
cess in the public records of leases,
mortgages real estate transactions.
probates of wills, in court records
stock brokers' offices. banks and trust
companies, as well as the thousand
and one hints which appear in the
papers indicative of those who are liv-
ing like income taxpayers" All this
Information must be assembled and
classified at Washington so that all the
facts regarding any one individual will
appear on single card
Make a Dragnet Investigation.
Second. one or more districts must