Evening star., 1937-05-29

1oonholes aren't David Lawrence.
legal, then the rich men run the risk
Of going to Jail and having lot of
unfavorable items In the newspapers
charging them with the crime of tax
evasion.
Mr.. Roosevelt has been led to be-
lieve that q small number of tax
evaders exist, but that the taxes they
refuse to pay run into the millions.
just how many millions has not been
disclosed. But it would appear that
If all the income of men in the big
brackets were taken 100 per cent by
the Government and no deductions or
exemptions Of any kind were allowed,
1t still wouldn't have been enough to
balance the budget last year.
The President made 1t clear that he
did not indict the vast majority Of
income taxpayers. He thought the
overwhelming majority were honest
and file absolutely ethical returns.
His complaint was against the small
group who invented the loopholes and
he didn't think loopholes should be
invented, even If 1t IS legal.
Evasion Is Illegal.
In other words, for years there has
been a distinction between tax avoid
ance and tax evasion. The former Is
legal. the latter is illegal.
The difference lies in the fact that
o taxpayer has right to deduct
what the law permits him to deduct.
The game of inventing loopholes can
be condemned as unethical, but 1t Is
not bit more so than the actual prac-
tice Of the Government itself. Thus
when the Supreme Court OF the
United States invalidated the process
ing taxes and these sums were re-
turned to the taxpayers, the Roose-
velt administration turned around
and slapped an unjust enrichment
tax" on those recovered taxes. The
fact that the Supreme Court said 1t
wasn't true tax originally made no
difference
Now as long as the Government
plays a game with the taxpayer there
will be avoidance. The British gov
ernment has had the same experience
with the income tax. The more dis
criminatory and punitive the taxes the
greater the amount of the effort OF
avoidance, if not evasion,
The whole attitude of the Roose-
velt administrat has come in for
severe criticism, especially IN the
matter Of overassesSments. It has
been charged by various taxpayers
that the Government agents are told
to make excessive overassessments un-
less waivers OF the statute Of limita-
tions are granted.
Whether there are many cases OF
this kind, the fact remains that tax
evasion touches the question Of in
tegrity and tax avoidance touches
the question Of fairness and equity.
Spirit Of Taxpayers.
If the tax policy of the Govern
ment of the United States were con-
cededly fair, if its tax collectors came
to the taxpayers with clean hands,
there would be a different spirit on
the part OF the taxpayers. The
tendency of the Government to levy
taxes irrespective Of fairness, to
penalize thrift and to squelch in
centive does not awaken any high
sense Of generosity on the part Of a
taxpayer when he finds he can legally
deduct a certain item and save him.
self some taxes.
II it is unethical to take ad-
vantage Of legal exemptions, then
officials in the Government itself are
to be found who do not hesitate to
take advantage of every legal exemp-
tion possible. The question Of whether
. loophole is new or can be
classed as an invention and hence
u unethical is somewhat novel be-
cause avoidance turns wholly on what
lawyers say anyway and most of the
big taxpayers do not make out their
own returns. They would not dare
to do so because the law Is so COM
plicated it takes lawyer or tax ex-
pert to help a taxpayer make out
. fool-proof return.
II 1t Is unethical for lawyers to tell
their clients how to save tax money,
then the question of ethics is some
thing for the legal profession to
worry about. For the difference be-
tween . large and . small fee in not
few instances is the difference be-
tween = lawyer who tells his client
how to save money legally and one
who doesn't save quite as much.
The rolls are full of tax advisers
who once worked in some branch Of
the Government and who tell big
taxpayers how to save money. It's
practice all by itself and the process
of tax avoidance Is far from abol-
3shed either as legal or 4 moral
one, because few Of the larger tax
payers consider the Roosevelt admin
istration fair or equitable in its tax
policies.