Evening star., 1937-06-23
Evasion

Continued From First Page)
OF remarks among committeeman
1t passed with little comment, how
| ever.
Much of the questioning early in
today's session turned upon elabora-
ton OF yesterdays testimony.
Senator Harrison. Democrat, of Mis-
sissippi asked whether Richard E.
| Dwight, New York attorney and one
of the six named yesterday, had
urged that the other five taxpayers
take out policies in the Bahamas In
surance Co.
He denies that any others par
| ticipated at his suggestion" Leming
replied.
Leming added that Henry W. Lowe
| an insurance broker and another of
the six, was client of Dwight's. He
said Dwight says he didn't suggest a
policy to Lowe"
Punishment Considered.
Senator Walsh, Democrat, of Massa-
chusetts interposed to ask how Con-
gress could enact any law to punish
fraud which would be more effective
than present statutes.
Herman Oliphant, Treasury gen.
eral counsel, agreed with Walsh there
was plenty of law on the statute
books to punish fraud"
Then the whole question here is
whether this insurance device is a
fraud or not" persisted Walsh.
That's right" Oliphant replied.
Couldn't Congress place an ex-
else tax on transactions of this kind?"
inquired Representative Vinson, DEM
ocrat, Of Kentucky, which would be
In addition to the present tax and
criminal laws?"
THAT and similar civil sanctions
could be added to the present GRIM
inal sanctions" Oliphant agreed.
Commissioner Helvering said tax
avoidance by the use Of personal
holding companies arises because
many wealthy taxpayers have split
themselves into multiple personalities
with the single purpose of avoiding the
payment of taxes which would be due
| II they followed the natural, untax-
| conscious course Of remaining one per-
| sonality."
Device for Transfer.
In practice, Helvering said, the typi-
cal personal holding company is de-
| vice whereby assets of an individual,
or a family, or closely associated
group, are transferred to, or acquired
by, a corporation.
These assets, he said, may be stocks
| and bonds, a country estate, a farm,
a yacht, patents and copyrights or
other valuable holdings.
Helvering said 1t appeared the in
dividual owners OF II holding COM
panies examined by the Treasury
would have had to pay an aggregate
surtax of $1,638,023 if no personal
holding companies had been organ
| lied.
The II companies, however, he said,
had total tax liability of only $43,973.
At one point Helvering referred to
a statement in which j. P. Morgan was
quoted as saying, If the Government
doesn't know enough to collect its
taxes, man is fool to pay them"
Morgan later explained he did not
mean to condone tax-dodging or il
legal tax avoidances.
That attitude" the commissioner
said, lis fairly general It stimulates
both corporations and individuals to
distribute circular letters, advertising
their skill in enabling individuals to
avoid taxes"
| The Treasury official told the COM
mittee I'VE believe there is an enor-
nous loss of revenue to the Govern
ment" as the personal holding COM
pany section Of the revenue law now
stands and that q statutory pro-
vision originally designed to prevent
tax avoidance has been perverted by
certain individuals to the end Of ac-
complishing tax avoidance"
The committee adjourned ut noon
] eastern standard time) until 10 IN.
tomorrow after Helverins had COM