Evening star., 1947-12-14

oLleTS VINO nave SLuQleQ the
clusion that if the Bureau of Inter
catch all the tax dodgers it would be-
possible, without curtailing any
Government activity, to cut Federal
taxes by 20 per cent. This is
theoretical figure. 1t is possible to
make an arguable case for this con-
clusion, but no Treasury officer will
assume responsibility for it.
Loss Easy to Figure
The Treasury estimate of some
thing like a half billion dollars in
potential revenue lost is a matter of
simple arithmetic. The Treasury, in
its budget request, sought for its
Bureau of Internal Revenue S208,-
100000 Congress shaved the appro-
priation to -s188, 100000. This made
it necessary for the bureau to drop
1000 of its $1,000 tax auditors and
investigators.
On the average the employees dis
missed were paid $4,000 a year-a
total of $28,OOO,OOO. On the average
these people brought into the Treas
ury between $40 and s25 for each
dollar they were paid.
The saving in Government SAL
aries, then, was $28,OOO,OOO The
loss in taxes-taking the minimum
figure of 20 to l as additional rev.
enue produced by tax investigator
or auditor in return for his salary,
would be $532 100000. That repre-
sents the difference between the
$28, 100000 which would have been
paid to the tax investigators, and
the $560,0oO,OoO they might have
collected from tax cheaters.
Higher Mathematics
The more intriguing alternative
that 20 per cent tax cut-involves a
complicated calculation and several
assumptions. 1t assumes Govern
ment budget in the vicinity of $40,-
600 100000 and that the official
Treasury estimate of $5,OOoOOO 900
in potential tax revenue not now
collected might prove to be about
So, 900 900, 0,000-if an army" of tax
investigators were put to work.
BY an army" Of tax investiga-
tors is meant $4,000 instead of the
present 10000. A further assumption
is that the 100000 would be able to
perform at the same scale of ef-
ficiency as the 20.O0O-that the law
Of diminishing returns would not
come into operation.
Granted these assumptions, the
rest is easy. The extra $1,000 ,0O0, 900
in revenue works out to 20 per cent
of a national budget of $40,O00,-
100000.
Undersecretary of the Treasury
A. L. M. Virgins puts the figure of
revenue lost through tax lodging at
a conservative $4,000, 100000. Other
Treasury officials lean toward the
higher figure Of $4,000, 100000.
In recent years the Internal Rev.
enue Bureau has stepped up its in
vestigation of tax returns. Results
have been quite revealing. Con-
sidering only the war years-1941-
I947 inclusive-recoveries of evaded
taxes have risen from $383, ,32O585
for fiscal 1941 to 1929, ,710,237 for
fiscal 1947. Each year has shown
an increase, but it was not until
fiscal 1916 that the total rose above
the billion mark.
Large Recovery Expected
Curiously, despite the cut in per-
sonnel this year, the expectation Is
that the total in recoveries for fiscal
1948 will go above the two-billon
mark. This Is because an investiga-
ton often requires several years,
and the fruits of work done in the
last year or two will not become ap-
parent until next year or two.
The smaller figures for the fight
ing war years are attributed in part
to the circumstance that Internal
Revenue men skilled In investiga-
tions were in the Army. They think,
at the bureau. that a trained and
skillful man can almost smell an
untruthful return when he looks
at It, With many of the bureaus
skilled men in uniform, their places
were taken by others who lacked
the necessary experince.
But as the fighting war approached
its close, the bureau regained the
services of its old hands and it was
they who were primarily responsible
for the great increase in recoveries
for 1916 and 1947.
Early in 1945, as the war drew
toward its end, decision was made
to make fuller use of the trained
men returning after military serv-
ice. Congress agreed then, and the
bureau was authorized to about
double its staff, bringing the total
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