Evening star., 1951-09-10
Enforcing a Gambling Tax

Offhand, the idea of special tax on gam
bling has lot of appeal. With gambling
SyndicateS raking in an estimated $40 billion q
year, the prospect of collecting as much as 81
billion year in taxes from the rackets through
10 per cent Federal excise tax is worth, con-
sidering Also to be considered are the objections
to such plan-and definite objections have been
raised by those who would have the responsibility
OF enforcing the tax amendment.
The bill passed by the House and approved
by the Senate Finance Committee is not legiSla-
ton recommended by the Senate Crime Com
nittee. It is not claSSed as crime-SuppreSSion
measure which properly should be studied by
the Judiciary Committee or a special crime
committee. It is revenue producing amendment
to the tax bill. But it was inspired by desire
to hit at the gambling racketeerS and hence is
really crime-curbing proposal, basically AS
such, it would drastically enlarge the re-
SponSibiitieS of the Internal Revenue Bureau,
Transforming revenue agents into gambling in
vestigators and projecting them directly into the
domain of local police authorities.
Under existing laws gambling profits are
subject to the regular income taxes, and gamblers
are required to report all such profits in their
returns to the bureau. Most Of the big operators
do that. Few of them hesitate to state frankly
that the income is from gambling. Those who
try to cover the source or evade taxes find
themselves under investigation by income tax
agents. Many of the evaders have learned their
lessons in court and are now making accurate
returns, so far as the bureau can determine.
The bureau is primarily interested only in col
lecting the taxes due, not in investigating the
gambling activities of the taxpayers.
Under the proposed legislation, however, the
bureau would have to prove that the money
actually came from gambling, in order to collect
the special 10 per cent excise and the $50 annual
occupatonal tax to be imposed on bookmakers
and other bet receivers. Gamblers who in the
past have freely admitted their occupation may
hesitate to do so if it means added levies. II
they try to evade the law, large force Of special
Investigators will be required to check on them.
The bureau is said to have estimated that at
least 5000 additional agents. trained in criminal
type investigation work, would be needed to
enforce the excise and occupational taxes Such
force would be encroaching on field hitherto
reserved for local law enforcement agencies. IT'S
job would be, first, to determine whether
suspected evader of the gambling taxes actually
was engaged in gambling and, second, what his
income from that source amounted to. Local
police undoubtedly would welcome the invasion
Of Federal agents into this field, for it would
tend to relieve police of responsibility right
fully theirs
But the Internal Revenue Bureau never was
intended to become crime-suppresSion agency.
Congress should give this plan more study than
apparently has been given to it to date. In any
event. the bureau could not possibly take on
this new burden without substantial expansion
of its present force. If Congress decides to take
this drastic step, it should give the bureau the
extra money and staff needed to do the job
effectively. Otherwise, the gamblers will benedt
from lax enforcement of a Federal law that
might encourage lax enforcement Of gambling
laws at the local level too