Evening star., 1937-06-01

upor completely honest returns by
the taxpayer.
THE disclosures are so serious that
I recommend that authority be given
to the Treasury Department with an
adequate appropriation in order that
complete and immediate investi-
CATION may be conducted The cost
OF such An investigation will be re-
turned many times over TO the Treas
ury Of the United States.
Faithfully,
HENRY MORGENTHAU, JR."
THE President.
The White House"
Schemes Undermine
Foundations of Society.
A feeling of indignation on reading
this letter will, I am confident, be
yours, as it was mine.
What the facts set forth mean to
me is that We have reached another
major difficulty In the maintenance
OF the normal processes Of our Gov
ernment. We are trying harder than
ever before to relieve suffering and
want, to protect the weak, to curb
avarice. to prevent booms and depres-
slons-and to balance the budget.
Taxation necessary to these ends is
the foundation OF sound governme ntal
finance. When our legitimate rev.
enues are attacked the whole struc-
ture Of our Government is attacked.
Clever little schemes" are not ad-
mirable when they undermine the
foundations of society.
The three great branches OF the
Government have joint concern in
this situation. First, 1t is the duty
OF the Congress to remove new loop
holes devised by attorneys for clients
willing Ia take an unethical advan-
taae OF society and their own Gov
erDment. Second, it is the duty OF
the executive branch Of the Gov
ernment to collect taxes, to investi-
gate fully all questionable cases, tc
prosecute where wrong has been
done and to make recommendations
for closing loopholes. Third, it is the
duty Of the courts to give full con-
sideration to the intent OF the Con-
gless in passing tax laws and to give
full consideration to all evidence
which points to an objective OF eva
sion on the part of the taxpayer.
Very definitely, the issue immed
lately before us Is the single one
relating to the evasion or unethical
avoidance of existing laws. That
should be kept clearly in mind by the
Congress and the public. Already
efforts to befog this issue appear
Already certain newspaper publishers
are seeking to make 1t appear-first
that if an individual can devise un-
anticipated methods to avoid taxes
which the Congress intended him to
pay, he is doing nothing unpatriotic
or unethical: and second, that because
certain individuals do not approve
of high income tax brackets, or the
undistributed earnings tax. or the
capital gains tax, the first duty Of the
Congress should be the repeal or re-
duction of those taxes. In other
words, not one but many red herrinzs
are in preparation.
Congress- Duty
To Stop the Practices.
But 1t seems to me that the first
outy OF the Congress is to empower
the Government to stop these evil
practices. and that legislation to this
end should not be confused with
legislation to revise tax schedules.
That is a wholly different subject.
In regard to that subject, l have
already suggested to the Congress
that at this session there should be
no new taxes and no changes OF rates.
And have indicated to the Congress
that the Treasury Will be prepared
by next November to present to the
appropriate committees information
on the basis of which the Congress
may, If it chooses, undertake revisions
of the tax structure.
The long-term problem of tax
policy Is wholly separate from the
immediate problem Of glaring evasion
and avoidance Of existing law.
In this immediate problem the de-
cency OF American morals is involved
The example of successful tax dodg.
ing by minority of very rich indi-
viduals breeds efforts by other peo-
pie to dodge other laws as we'll as tax
laws.
1t Is also matter of deep regret
to know that lawyers of high stand
ing at the bar not only have advised
and are advising their clients to uti.
lize tax avoidance devices, but are &C.
lively using these devises in their OWE
personal affairs. We hear too otter
from lawyers, as well as from theil
clients, the sentiment 1T is all right
to do it If you can get away with it,
am confident that the Congress
will wish to enact legislation at this
session specifically and exclusively
aimed at making the present tax
structure evasion proof.
I am confident also that the Con-
greSs will give to the Treasury all au-
thority necessary to expand and COM
plete the present preliminary inves-
tigati including, of course, full
authority to summon witnesses and
compel their testimony. The ramif-
cations and the geographical scope OF
complete investigation make it nee
essary to utilize every power of Gov
ernment vhcih can contribute to the
end desired
Franklin D. Roosevelt
The White House,
June l, 1887.
ali ElHll Ia