Milford chronicle., 1937-08-13
"TGr Evasion"

In an editorial dated May 29, the
New York Times said: Ever since
March Is, when the tax returns were
considerably below what the Treas
ury had expected, there has been a
great deal of concern in Washing
ton regarding tax avoidance The
President has finally spoken about
the matter and cited examples of 1t.
On all this the comment of Senator
Wheeler seems sensible. If there
have been evasions, he remarks, civ
II suits should be brought by the
Treasury to recover the money. If
fraud has been perpetrated. criminal
prosecution should be started. II
the law needs strengthening, the
Treasury should work out specific
legislation to cover the abuses and
recommend action by Congress
"Loopholes in existing tax laws
should, Of course, be plugged up as
soon as they become evident. One
enormous loophole has been evident
for years-tax exempt bonds. Yet
the present Administration, like its
predecessors, has done nothing about
It. AS for other 'loopholes' 1t is the
Treasury's function to determine,
first, whether these are really justi-
fable exemptions and, second, whe-
ther a rule can be drawn to close
them without placing an unjust bur-
den on honest taxpayers.
Meanwhile, one may be permitted
to doubt whether Representative
Doughton is correct In asserting that
the recent failure of tax revenues to
meet the Treasury estimates vas
due to evasion by the big taxpay-
ers.' No doubt there Is a certain per-
centage of evasion, but this is not |
something that appears suddenly In |
one year. And il there has been a |
growth In tax avoidance 1t should |
be instructive to inquire into Its |
probable causes.
'It is fair to ask whether one of |
these has not been the attitude to-
ward the income tax of the Admin
itself. AS Professor r. M.
Haig, leading tax authority, has
pointed out, the income tax is essen
TALLY a 'self-assessed' tax resting
upon q detailed declaration of the
taxpayer which the Treasury can
hope to check only to a minor ex-
tent. Successful administration re-
quires the active assistance OF the
taxpayer. When a levy that Is de-
pendent upon self-assessment comes
10 be generally regarded as ineauit-
able, its administration tends to
"The revenue acts have In
iicted serious damage upon the in
,ome tax by numerous notifications
hat do violence to the taxpayers ,
ense of fair play. thus impairing his
pirit of cooperation. This is wholly :
part from the question of tax rates
though when Federal income tax !
ates alone mount to IS per cent on !
he highest brackets, not counting I
THAT the individual state in which .
be taxpayer lives may have taken h
a addition, Il is ardly surprising IL /,
axpayers here an dthere cease to v
rouble to earn this amount for the 8
AXE of turning 1t over to the Gov
and IL In consequence rev. h
nues decline. X
what are we to say Of the fair C
ess of a law which taxes capital a.
aims but refuses to allow deduc- N
ons for capital losses? What are we y
, say of law which refuses to al =
wv either the individual or corpor- te
ton to carry forward losses as ~
aduction from the taxable income ~
! subsequent years. What are we to 3
" of laws which refuse to permit % %
returns for corpora ~
ons; which place heavy penalty II
xes on corporations for putting \,
,ide funds into contingency reser- p
rs or into productive plants instead in
recklessly paying them out In div
ends7 ce
"It is desirable to plug up loop 81
lies IN the income tax laws, but II 10
no less desirable to re-examine 81
ose laws, and our present meth HI
Is of auditing tar returns, to make I'll
re that they are not sometimes pc
to transform honest men IT
TO bitter opponents of the income by
<" mi