[ Editor's Note: Cross posted from Tax.com]
"The investigation of the income tax returns for each successive year reveals the increasingly stubborn fight of wealthy individuals and corporations against the payment of their fair share of the expenses of government." With that scathing observation, Treasury secretary Henry Morgenthau introduced a 1937 study of tax avoidance techniques -- the prelude to a major congressional investigation of tax slacking by the rich and famous. "Although Mr. Justice Holmes said: 'Taxes are what we pay for civilized society,'" Morgenthau contnued, "too many citizens want the civilization at a discount."
The memo went on to identify nine popular methods of tax avoidance -- and to name a few of the the taxpayers using them. The techniques included:
- multiple trusts for relatives and dependents (Amoco founder Louis Blaustein and Merrill Lynch patriarchs Charles E. Merrill and Edwin C. Lynch);
- foreign personal holding companies (heiress Dorothy Whitney Elmhirst and electrical pioneer George Westinghouse Jr.);
- domestic personal holding companies (financier Charles Hayden and General Motors President Alfred P. Sloan); and
- incorporated yachts and country estates (Sloan again, as well as chemical titan Alfred I. du Pont, U.S. Steel chief Myron C. Taylor, San Francisco banker William H. Crocker, and numerous others).
Initially, Treasury and White House officials kept the names secret, but leaks soon took care of that. Congress eventually called many of the accused to testify before a special, very high profile committee charged with closing loopholes.
I've written about this before, so let's just cut to the chase by posting the memo in it's entirety, attached below as a PDF.