The IRS Scandal, Day 558

Town Hall, The IRS Hatchetmen:

[W]hen the Joint Committee on Taxation was started, it was a temporary committee and that was founded because the IRS (then called the BIR) was engaged in the same type of political bullying and illegality that conservatives have used against the Tea Party since 2010.

Senator James Couzens of Michigan, who helped found the JTC, was the Larry Ellison of his day. Like Ellison, who co-founded Oracle, Couzens made his money as the number two guy and management genius behind Henry Ford and Ford Motors. ... As a Republican from Michigan he was considered a progressive and opposed tax cuts, supported the graduated income tax and–like another rich guy, Warren Buffet—acted as the self appointed popular voice against rich corporations, railing against favorable tax treatment for companies.

At the time Secretary of the Treasury, Andrew Mellon, himself one of the richest men in America was advocating a scientific basis for taxation, “the use of economic theory to identify the tax rates that would maximize revenue yet burden productive capital as little as possible,” according to George K. Yin at the University of Virginia Law School. In short he was proposing an infant Laffer curve.

Mellon noted that tax policy was distorting the distribution of capital with companies less willing to pay dividends to shareholders because of the hostile tax treatment dividends received. He also noted that wealthy people were more inclined to invest in tax-free municipal securities because of the different tax treatment that cities and states had versus corporations.

As a progressive Republican Couzens argued against Mellon, using his own status as a rich man to make his point. His argument—in a preview of Warren Buffet’s own stupidity—was that tax treatment made little difference in what types of investments rich people made. ...

By inviting scrutiny of his tax situation, however, Couzen challenged Mellon publicly and also admitted that the tax treatment of investments changed his behavior. The result eventually was an examination in 1925 of Couzen’s tax liability for the sale of his Ford Motor stock in 1913, according to Yin, which was supposed to amount to 73 percent of the gains from the stock, a tax that Couzen said he supported.

The affair became unseemly with both sides using private tax records as weapons against the other. And when Couzens made the affair public in the Senate, the Senate was outraged that a sitting Senator would be subject to retaliation by an adinistration.

Thus was born the Joint Committee on Taxation whose expressed aim was to "investigate and report upon the operation, effects, and administration of the Federal system of income and other internal revenue taxes and upon any proposals or measures which in the judgment of the Commission may be employed to simplify or improve the operation or administration of such systems of taxes,” according to the JTC’s website.

In reality however it was there to stop internal revenue from being used as a political weapon.

• The IRS Scandal, Day 557 (Nov. 17, 2014)
• The IRS Scandal, Day 556 (Nov. 16, 2014)
• The IRS Scandal, Day 555 (Nov. 15, 2014)
• The IRS Scandal, Day 554 (Nov. 14, 2014)
• The IRS Scandal, Day 553 (Nov. 13, 2014)
• The IRS Scandal, Day 552 (Nov. 12, 2014)
• The IRS Scandal, Day 551 (Nov. 11, 2014)
• The IRS Scandal, Day 550 (Nov. 10, 2014)
• The IRS Scandal, Day 549 (Nov. 9, 2014)
• The IRS Scandal, Day 548 (Nov. 8, 2014)
• The IRS Scandal, Day 547 (Nov. 7, 2014)
• The IRS Scandal, Day 546 (Nov. 6, 2014)
• The IRS Scandal, Day 545 (Nov. 5, 2014)
• The IRS Scandal, Day 544 (Nov. 4, 2014)
• The IRS Scandal, Day 543 (Nov. 3, 2014)
• The IRS Scandal, Day 542 (Nov. 2, 2014)
• The IRS Scandal, Day 541 (Nov. 1, 2014)
• The IRS Scandal, Day 540 (Oct. 31, 2014)
• The IRS Scandal, Day 539 (Oct. 30, 2014)
• The IRS Scandal, Day 538 (Oct. 29, 2014)
• The IRS Scandal, Day 537 (Oct. 28, 2014)
• The IRS Scandal, Day 536 (Oct. 27, 2014)
• The IRS Scandal, Day 535 (Oct. 26, 2014)
• The IRS Scandal, Day 534 (Oct. 25, 2014)
• The IRS Scandal, Day 533 (Oct. 24, 2014)
• The IRS Scandal, Day 532 (Oct. 23, 2014)
• The IRS Scandal, Day 531 (Oct. 22, 2014)
• The IRS Scandal, Day 530 (Oct. 21, 2014)
• The IRS Scandal, Day 529 (Oct. 20, 2014)
• The IRS Scandal, Day 528 (Oct. 19, 2014)
• The IRS Scandal, Day 527 (Oct. 18, 2014)
• The IRS Scandal, Day 526 (Oct. 17, 2014)
• The IRS Scandal, Day 525 (Oct. 16, 2014)
• The IRS Scandal, Day 524 (Oct. 15, 2014)
• The IRS Scandal, Day 523 (Oct. 14, 2014)
• The IRS Scandal, Day 522 (Oct. 13, 2014)
• The IRS Scandal, Day 521 (Oct. 12, 2014)
• The IRS Scandal, Day 520 (Oct. 11, 2014)
• The IRS Scandal, Day 519 (Oct. 10, 2014)
• The IRS Scandal, Day 518 (Oct. 9, 2014)
• The IRS Scandal, Day 517 (Oct. 8, 2014)
• The IRS Scandal, Day 516 (Oct. 7, 2014)
• The IRS Scandal, Day 515 (Oct. 6, 2014)
• The IRS Scandal, Day 514 (Oct. 5, 2014)
• The IRS Scandal, Day 513 (Oct. 4, 2014)
• The IRS Scandal, Day 512 (Oct. 3, 2014)
• The IRS Scandal, Day 511 (Oct. 2, 2014)
• The IRS Scandal, Day 510 (Oct. 1, 2014)
• The IRS Scandal, Day 509 (Sept. 30, 2014)
• The IRS Scandal, Day 508 (Sept. 29, 2014)
• The IRS Scandal, Day 507 (Sept. 28, 2014)
• The IRS Scandal, Day 506 (Sept. 27, 2014)
• The IRS Scandal, Day 505 (Sept. 26, 2014)
• The IRS Scandal, Day 504 (Sept. 25, 2014)
• The IRS Scandal, Day 503 (Sept. 24, 2014)
• The IRS Scandal, Day 502 (Sept. 23, 2014)
• The IRS Scandal, Day 501 (Sept. 22, 2014)
• The IRS Scandal, Days 401-500 (June 14, 2014 - Sept. 21,2014)
• The IRS Scandal, Days 301-400 (Mar. 6, 2014 - June 13, 2014)
• The IRS Scandal, Days 201-300 (Nov. 26, 2013 - Mar. 5, 2014)
• The IRS Scandal, Days 101-200 (Aug. 18, 2013 - Nov. 25, 2013)
• The IRS Scandal, Days 1-100 (May 10, 2013 - Aug. 17, 2013)