Evening star., 1942-01-25
Morgenthau Demands
Closing Of LoophoIes
In New Tax Law
Says Tox-Free Bonds
Give Wealthy Refuge
From Income levies
BY the Associated Press.

By the Associated Press.
CLEVELAND. Jan. 24-Secretary
of the Treasury Morgenthau de-
clared today "the very first billion"
of President Roosevelt's goal Of
50 ,OO0, 900 900 in new revenue should
be obtained by closing remaining
loopholes in our tax system. .
Blasting tax-exempt State and
municipal bonds and other "glaring
examples" as dangerous ito the
unity we need to win this war"
Secretary Morgenthau pledged him
self to fight for the speedy removal
of any defects in the tax laws which
may injure our national morale.
This Is not the time for me to
discuss the new tax program" he
told Cleveland's City Club. The
President has said that we must
have $4,000, 900 900 in new revenue.
We have no more right to fall short
of that goal than we would have to
fall short of the Presidents an
nounced goal of 10000 planes and
5000 tanks in 1912"
Refuge for Wealthy.
Delivering his first address In
more than a month, Mr.. Morgen-
thau asserted - apparently with
presidential approval - that tax
free securities provide wealthy tax
payers a possible refuge, not from
some income tax, but from all In
come taxes.
mo matter how much money may
be needed for the war, no matter
how high the tax rates may be for
others, a taxpayer Is not obliged
to contribute anything in this hour
of his countrys peril. if only he can
afford to lay his hands upon a
sufficient amount of tax-exempt
securities. 1t Is high time,
In my opinion, to tax the income of
State and municipal securities-not
only the income Of future issues,
but also the income from those
issues now outstanding"
He declared this loophole cost the
Treasury, at present tax rates, about
5000, 100000 a year: that another
$55,O00,000 escaped tn the nine
States having the community prop
erty system; that separate income
tax returns for husband and wife
caused a $3.50 ,000, 900 leak, and that
S80,000,0OO was lost because under
the income tax laws percentage
depletion provision" owners of mines
and oil wells are permitted to de-
duct for depreciation "far more than
the amount of money" they put into
the property.
Other Glaring Examples.
'1 have pointed out the most glar-
ing examples of these loopholes,"
Mr.. Morgenthau said, "but there
are others" which cause almost a
billion dollars Of taxes annually to
be thrown "onto the shoulders of
the rest of us" because a few thou
sand individuals escape their fair
share.
'1t has been difficult until now to
correct our tax laws because tax
payers have been too few and too
Indifferent. Until the great body of
American taxpayers becomes thor
oughly aroused to- the injustices
which have been left on the statute
books year after year, we cannot
expect to correct the laws The
remedy lies in your hands as tax
payers"
Secretary Morgenthau indicated
IN an interview that United States
Defense bonds will not be renamed
war bonds"
I'VE gave that lot of thought"
he told reporters, "but we had a
poll taken which showed two-thirds
of the people prefer to have them
called Defense bonds. They've been
going so well that perhaps We have
become a little superstitious about
changing"