Evening star., 1937-06-03
How Much Is Involved?

1t would have been enlightening to the
taxpayers to have obtained from the
President and Secretary Morgenthau in
the course of their expressions of right
eous Indignation over tax-dodging, some
estimate of the amount in revenue
actually lost to the Government through
the activities in tax avoidance of slick
lawyers and the "so-called leaders of the
business community"
But from the figures presented by Mr..
Morgenthau the greatest losses in reve-
nue-amounting possibly to s1OOOOO,-
O00-result from loopholeS in the law
rather than wicked connivance between
the lawyers and their wealthy clients
seeking escape from high surtax obliga-
tlons. Mr.. Morgenthaus case histories
of these vilIatnies suggest that possibly
as much as s2,863,OoO may be involved.
But even such rough estimate is con-
fused by the fact that in some cases
mentioned by Mr.. Morgenthau, the
culprits merely sought" to avoid tax
payments and apparently were not sue
cessfuI.
A discussion Of the actual amounts
estimated as lost through tax-dodging
contrivances, however, might have taken
considerable wind out of the Presidents S
storm against wealthy tax evaders. For
the amount doubtless would be relatively
small-not enough to figure materially
one way or the other in the business of
trying to balance the budget. There is,
as the President says, a moral question
involved in the avoidance of obligations
to ones country-financial or otherwise.
But there is collateral question of why
there should be such rush by the
wealthy to avoid the payment of taxes.
The answer lies little deeper than
mere human SelfshneSs. 1t is furnished,
at least in part, by the belief on the
part OF many wealthy citizens that they
have been singled out for persecution
and punishment for politcal-not reve-
ue-raising-purposes. Thus singled out,
they have shown natural inclination
to escape.
The present surtaXes in the higher in
come tax brackets-afecting only
small proportion of income tax payers
are political, not economic, in their
structure. 1t is a question whether the
law Of diminishing returns is not as
much involved as the evasions of the
revenue law in accounting for the drop
In returns under estimates. Less than
one per cent of individual income tax
payers pay taxes on incomes in excess of
S25O00, although they pay well over
half the total individual income taxes
collected. The members of this small
group may feel they are bearing a dis
proportionate load and seek to avoid it,
especially by the purchase of tax
exempt securities, which probably repre-
sent the most widely utilized form of
"tax evasion"
BY all means the 1oopholes left in
hurriedly, carelessly- drawn soak the
rich" revenue acts should be closed. BY
all means the wealthy tax-dodgers
should be brought to book and perhaps
sent to join Al Capone at Alcatraz But
If taxes are what we pay for civilized
society" there is a moral obligation on
the part of the Government to increase
the number of direct taxpayers, cutting
down in some reasonable proportion the
number of those who now get their
civilized society free. That would re-
quire considerably more political cour-
age-and produce considerably more
revenue-than a grand and colorful
roundup of few rich tax-dodgers. But
1t would teach the people what their
Government is really costing them, as
well as end the pleasant fiction that
such excessive costs can be taken out
OF the hides of the wicked "so-calIed
leaders of the business community"