The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1937-06-01
TREASURY LISTS MANY MEANS
USED TO ESCAPE PAYMENT
The tert of President RooSe-
Uelt's message to Congress on
tar eUdSion tollotUS in part

To the Congress of the United
States:
A condition has been develop
ing during the past few months
so serious to the Nation that the
Congress and the people are en-
titled to information about 1t.
The Secretary of the Treasury
has given me a report of a pre-
liminary study of income TAX re-
turns for the calendar year 1880.
This report reveals enortS dU
avoidance and evasion of tax Ia
bilitv. so widespread and so amaz-
ing both in their boldness ana
their ingenuity, that further &C
ton without delay seems I'M
perative. o,,or
of the Government to collect, uni
fornly. fairly and without DIS
termination, taxes based on
statutes adopted by the congress-
Methods Are Many
Mr.. Justice Holmes said taxes
are what we pay for civilized So
CITY" Too many individuals, how
ever want the civilization at Oils
count. Js
Methods of escape or intended
escape from tax liability are many.
some are instances of avoidance
which appear to have the color OF
legality: others are on the border-
line of legality: others are plainly
contrary even to the letter OF the
law.
All are alike in that they are
definitely contrary to the spirit
of the law. AL are alike IN that
they represent determined effort
on the part of those who use them
to dodge the payment OF taxes
which Congress based on ability
to paw. All are alike in that fall
ure to pay results in shifting the
tax load to the shoulders OF others
less able to pay, nd in mulctlng
the Treasury of the Governments
just due.
Treasury Letter
I commend to your attentlon
the following letter from the Sec
rotary Of the Treasury:
my Dear Mr.. President:
GAS you know, the Treasury
was surprised and disturbed by
the failure Of the receipts from
the income tax on March IS to
measure up to the budget esti-
mates. Therefore, we undertook
an immediate investigation.
"Only a preliminary report
can be made at this time be-
cause the complete investigation
covering all the income tax re-
turns filed will require the
balance of this year. Further
more, since many of the returns
of large manufacturing corpora
lions have not yet been filed, the
present report is confined al
most wholly to data disclosed by
the individual tax returns.
But even this preliminary re-
port discloses conditions so serl-
Gus that immediate action is
called for. More than the usual
examination and audit by the
Treasury is needed. 1t seems
clear that if tax evasion and tax
avoidance can be promptly
stopped through legislation and
regulations resulting from Spe-
cial investigation, a very large
portion of the deficiency in reve-
nues will be restored to the
Treasury.
Dummy Foreign Firms
1T herewith enumerate some
Of the principal devices now be-
ing employed by taxpayers with
large incomes for the purpose OF
defeating the income taxes
which would normally be pay
able by them. AS we continue
our preliminary examination,
other devices are being disclosed.
81. The device of evading
taxes by setting up foreign per-
sonal holding corporations IN
the Bahamas, Panama, New
foundland, and other places
where taxes are low and corpora
ton laws lax.
Americans have formed "a
such companies in the Bahamas
alone in 1885 and 1886, and %
more we're organized by Amerl-
cans in the Bahamas during the
past two months. Panama and
Newfoundland seem to be even
more fertile territory since their
corporation laws make 1t more
difficult to ascertain who the
actual stockholders are.
Moreover, the stockholders
have resorted to all manner OF
devices to prevent the acquisl-
ton of information regarding
their companies. The companies
are frequently organized through
foreign lawyers, with dummy in
corporatorS and dummy direc-
tors, so that the names Of the
real parties in interest do not
appear.
lone American citizen with a
100000 Bahamas corporation
has apparently attempted to
prevent the Bureau of Internal
Revenue from catching up with
him by filing his individual tax
returns in successive years from
towns in New Brunswick, British
Columbia, and Jamaica.
Adds Insult to Injury
Another individual believes
that he has been so successful
in removing his assets from the
United States to the Bahamas
that he is defying the Treasury
to collect a tax upon a S250,000