Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1926-02-15
REVIEW OF REVENUE BUREAU


We insist on investigations before
a court Of law being conducted ac-
cording to certain well defined regu-
lations, and that all interested
parties may be heard it is provided
that the defendant II unable to pro-
vide for his own defense shall be
granted counsel to conduct his case.
Such procedure is not sufficiently OBJ
served in spirit at least in the in
vestigations conducted before Con-
gressional. committees. This Is es-
pecially regrettable as it makes hope
lessly difficult what otherwise would
be somewhat difficult. the acauaint-
ing Of the public with actual condi-
tions. Not that such investigations
are not at times desirable, but that
they should be less political and
more judicial in their methods.
A committee was appointed by the
Senate to investigate the Bureau OF
Internal Revenue. Senator Couzens
"has it in, as the saying Is, for Mr..
Mellon. Now the country Is In no
mood to throw any improper favors
to Mr.. Mellon, although 1t is gener-
ally conceded we have never had a
better secretary of the Treasury than
is this same Mr.. Mellon. We are
under obligations to him for very
valuable service rendered. That,
however, does not exempt his affairs
from investigation if such shall
seem advisable for the good OF the
Government. but 1t is an additional
reason why we should insist that this
INQUIRY shall be conducted fairly.
We are not so informed as to be
capable of determining whether or
not this has been done, but there are
grounds for suspicion that it has not
We, the people. should hear ootn
sides to aid us in reaching con-
illusions. This, it is urged, has
not as vet been done. The MI
nority Of that committee. Senators
Watson and Ernst, complain that the
majority report was based to large
extent upon ex parte proceedings ana
that il presents only one side OF the
case. They render a minority report
of % printed pages. Tt declares the
| majority report and the criticisms
based upon it have given a graveiy
erroneous impression" to the pubic.
The concluding pages OF this NIL
| nority report review the accomplish
ments Of the Bureau, saying: Ihls
, will disclose whether or not the
| statements in the majority report
even though they were assumed 70 Dc
correct, could properly form the basis
for any general criticism of the al
ministration by the bureau IN col
lecting war taxes
Prior to the year 1913 the greater
| part Of the revenue OF the Govern.
ment was derived from the tax OIL
distilled spirits, liquors. and TOBACCO
| and the tax collected for that yea
amounted to only $350,0O0,oOo. Th'
first income tax law. which was pass
Cd In 1918. was simple in its pro
visions and very moderate IN IL
rates. The taxes collected for th'
drst few years after Its enactmen
avera red only $3.50, 100000 a year. /
was when this country entered th'
World War that the demand 10
revenues multiplied, the existing ta'
rates were increased, and new take
novel and untried were imposed. !
was then that Congress began .
place a stupendous burden upon th
Bureau Of Internal Revenue.
"The revenue collected by the bu
reau increa sed from $o12.000,00o II
1eT6 10 $500 900. 600 in 1917, an in
crease of IS per cent; TO- s5,o9u.oVo'
ono in 1918, an increase of GIL pc
cent; to $3.50, 100000 in 1919, an IN
crease Of 658 per cent; to s5,4oo,
600 900 in 1920, or 956 per cent IN
crease over the collections for l9lt
There were 10000 income-tax re
turns filed in 1916. This number In
creased yearly to 100000 in 1921. al
increase Of 1920 per cent. This ire
mendous increase in the revenue an
In the number Of returns filed. an
the increase In the work TO be per
formed as a consequence thereof. I'M
posed an uuheard of burden upon III
Bureau of Internal Revenue. TIL
bureau was not prepared to handl
the work or to start the audit OF tn
returns as they came in. The first o
1918 the entire organization in Wash
ington contained less than 500 officer
and employees. Experienced law
yers, engineers, and auditors had t
be secured and trained to build u
the Washington organization to it
present personnel OF over 5000 il
order to audit the returns and finall
settle the cases.
"Some of the duties imposed upol
the bureau in connection with tn
auditing of income and excess profit
tax returns may be stated in order t
show the magnitude of the task. TIL
law required the valuation of all tn
natural resources-mines metals
timber. and oil and gas-in thi
country as of March I, 1913, and a
of the date paid into the corporation
for stock. All other tangible prop
erty owned by taxpayers also had t.
be valued as of the same two date
for depreciation and invested capita
purposes. Amortization allowance
involving the consideration of al
absolutely novel allowance, had t.
be determined in an amount in ex
cess of $600,000,000. In determinin;
invested capital and depreciation t.,
value had to be placed upon all tn
intangible properties, i n CT u
patents, copyright, good will, process
ses and secret formulas, no pre-
| cedents for the valuation of whicl
existed. The income of the millions
of taxpayers who made returns hat
to be determined after a careful audi
of their accounts, and in the case o
corporations the annual income fol
every year since the Incorporation O.
! fha had RI ho OF or
for the purpose of computing invest.
ed capital. There is no case in his
tory where a similar or comparable
| burden has hpen nlaced Ilnnn ar