Evening star., 1942-06-02

Thus for years there have been in
consistences in the tax structure
that have not had behind them a
sufficient public opinion to effect a
change. 1t Is not generally realized,
for instance, that a business which
insures the life Of one of its execu-
tives and furnishes that policy as
collateral for a bank loan cannot
deduct the cost of the annual pre-
MUM as a business expense. But
the same business can deduct a pre-
MUM for fire insurance as q neces-
sary expense.
Even when the loan will not be
issued except by furnishing as COL
lateral policy on the life of key
executive and even when the policy
Is Of the term type which does not
build up any cash value, the pre-
mium is not deductible as a busi-
ness expense for tax purposes.
More and more, it would appear
that Congress would be justified in
giving broad discretionary authority
to the Internal Revenue Bureau to
deal with hardship cases and incon-
sistences and inequities that arise.
The bureau has grown remarkably
n its efficiency and administrative
quality in the last few years. AL
though there are the usual rumors
about misuse of the bureaus ma
ehinery for punitive political pur-
poses, 1t Is noteworthy that the
congressional committees apparently
have not uncovered enough of such
instances to warrant any charge Of
that kind or any inquiry.
British Case Cited.
The taxpayer who finds himself
IN difficulties with the Bureau of
Internal Revenue is much more
often irritated by the inconsistency
Of rulings accumulated over long
periods of time rather than over
any feeling of political bias The
bureau itself has an excellent per-
sonnel and Congress would do we'll
to intrust to this personnel more
discretionary power, as is the case
In Britain.
The representatives Of the British
Tax Bureau have virtually unlimited
authority to make tax settlements
on the spot, thus saving the taxpayer
and the government vast sums in
litigation and administrative check
ing. Americas Internal Revenue
Bureau will have q tremendous job
Of collecting and auditing of returns
IN the next few years, and If Con-
gress trusted the bureau more and
gave it a code of deductible allow
ances brought up-to-date to remove
inequities, the whole tax system
would move forward to greater pro-
ductivity of revenue.
Incidentally, Congress is beginning
10 hear about one inequity-namely,
the need for some deductible allow
ance for debt retirement.
TN February, 1885," writes one
businessman, Il decided to go for
ward with an expansion program
in my business. We arranged
bond issue of 100000 with no ma
turtles for the first two years and
the balance to be amortized over the
next eight years.
Default Hits Investors.
"Our business is not affected very
much by the general economic con-
ditions one way or the other. There
Is no possibility of our reaping alb
normal profits regardless of the
trend Of the times. Now we are
confronted with this situation: How
are we going to meet the payments
on our obligations and at the same
time meet tax payments? The lat
ter must be paid if we are to stay
IN business.
For the most part, the latter are
people of very modest means, and in
many instances their investment in
our bonds represents their entire
savings. Many of them are simple
people with whom we have pre-
viously done business, and their in
vestment was entirely on their faith
In our ability and integrity. 1t
would distress us considerably to
ever have these folk believe that
their confidence had been misplaced
or that we had taken advantage of
condition that permitted us to dis
count their investment.
I'VE recently discussed this posi-