I don’t know anyone who doesn’t do what they can to pay less taxes. Yeah, I know, this statement is a double-negative, but its true. Everybody is looking for tax relief in some form or another. Some go to great lengths to avoid paying taxes, and some cross the line into the territory of illegal tax evasion. Although tax avoidance is common at all socioeconomic levels, the government has always been eager to make examples of the rich and famous.
I came across a very interesting memo written by Treasury Secretary Henry Morgenthau in 1936 addressed to President Franklin Roosevelt. Morgenthau names several prominent Americans that were found using questionable tax avoidance techniques, including Jacob Schick (the shaver guy), Charles Merrill & Edwin Lynch, George Westinghouse, Alfred Sloan (President of General Motors), Alfred du Pont, and William Crocker. He also describes 9 of the most popular techniques used at the time.
Roosevelt subsequently launched a full-scale federal investigation into tax avoidance activities, even though we know now from a look at his own taxes that FDR himself was no stranger to such techniques. Interestingly, as part of Morgenthau’s conclusion, he states that tax avoidance is isolated to the wealthiest citizens. I’m not sure what to make of this. It is either a testament to his naiveté, or one of the weaknesses of his report. Or perhaps things have really changed in this country since 1936.