FDR and the IRS

FDR and the IRS

 By Lawrence W. Reed

Melanie Krause, the third head of the Internal Revenue Service (IRS) since President Trump’s inauguration, is resigning. The issue appears to be the sharing of tax data of undocumented immigrants with authorities in the Department of Homeland Security (DHS). The Treasury Department bypassed her so that DHS could directly access private taxpayer information, though attorneys raised serious privacy concerns.

Who the DHS wants tax information from—undocumented immigrants or “illegal aliens”—no doubt explains the muted reaction to the move. So does the ostensible purpose, verifying if immigration laws were broken. But what if high government officials wanted personal tax information so they could go after American citizens for their political leanings? That would raise much louder alarm bells.

You’d be naïve if you believed that it could never happen. There’s a sordid, bipartisan history of it from inside the White House itself. Presidents Kennedy, Nixon, and Clinton deployed the IRS against their enemies, as James Bovard noted in The Wall Street Journal more than a decade ago (https://www.wsj.com/articles/SB10001424127887324715704578482823301630836). We also know that the IRS targeted conservative organizations by the dozens while President Barack Obama looked the other way (at the very least).

The first president to personally corrupt the IRS for political purposes was the Democratic icon, Franklin Delano Roosevelt.

In his book, A Rendezvous With Destiny: The Roosevelts of the White House, FDR’s son Elliott wrote, “My father may have been the originator of the concept of employing the IRS as a weapon of political retribution.” Elliott said his dad was “fascinated” with other people’s tax returns.

We know from Elliott’s revelations and from Elmer Irey, who headed the tax investigation division of the Treasury Department in FDR’s administration, that FDR ordered the harassment of radio commentator Boake Carter for opposing his Supreme Court packing scheme in 1937.

FDR also sicced the IRS on the Republican congressman Hamilton Fish, who represented the President’s district in Hyde Park, New York. Fish was hounded until it turned out that the government owed him $80.00.

My good friend and favorite historian, Burton Folsom, wrote a chapter on Roosevelt’s abuse of the IRS (then called the Bureau of Internal Revenue) in his 2008 classic, New Deal or Raw Deal: How FDR’s Economic Legacy Has Damaged America. Folsom notes that the President targeted Louisiana’s Huey Long, a likely opponent in the 1936 Democratic primaries (before his assassination in 1935); publisher William Randolph Hearst for opposing the New Deal (investigators found nothing on him); and former Treasury Secretary Andrew Mellon (another political witch hunt) because impugning the man would sanctify the administration’s demagogic attacks on “the rich.”

In the Mellon case, Treasury’s Elmer Irey protested later that Roosevelt “made me go after Andy Mellon” even though he repeatedly advised the President and his Treasury Secretary that Mellon’s returns were clean. Journalist Walter Lippmann, often a Roosevelt ally, also protested, claiming the attack on Mellon was “all trumped up” and “an act of profound injustice.”

Though FDR himself was born with a silver spoon in his mouth, he found it politically opportunistic to posture as a class warrior. He drew little or no distinction between “tax evasion” and “tax avoidance” even though he availed himself of every loophole in the book to cut his own tax bill. Folsom reveals that in 1932, the very year he first ran for the White House, he took so many income tax deductions he only paid $32.

FDR also hindered scrutiny of his friends. Texas Congressman Lyndon Johnson (remember him?), a New Deal ally, was about to get nailed by the tax man when FDR intervened and shut down the investigation.

A head of the IRS in President Eisenhower’s first term quit the job when he realized from the inside how rotten the whole edifice of federal income taxation had become. I recently wrote a new article about him. On this year’s Tax Day (Tuesday, April 15), visit my website (or that of FEE.org) to read it. For now, think about this excerpt from his resignation announcement in 1955:

Congress went beyond merely enacting an income tax law and repealed Article IV of the Bill of Rights, by empowering the tax collector to do the very things from which that article says we were to be secure. It opened up our homes, our papers and our effects to the prying eyes of government agents and set the stage for searches of our books and vaults and for inquiries into our private affairs whenever the tax men might decide, even though there might not be any justification beyond mere cynical suspicion.

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(Lawrence W. Reed is President Emeritus, Humphreys Family Senior Fellow, and Ron Manners Global Ambassador for Liberty at the Foundation for Economic Education in Atlanta, Georgia. He blogs at www.lawrencewreed.com.)