Statement by the President on the Reduction in Appropriations for the Bureau of Internal Revenue.

I HAVE today approved H.R. 2436, providing appropriations for the Treasury and Post Office Departments for the fiscal year ending June 30, 1948, because it provides for continuing in part the essential activities of these Departments. However, I would be remiss in my duty if I failed to bring to the attention of the Congress and the people the gross inadequacy of the funds made available for the collection of our revenue.

The administration of the taxing statutes should never be influenced by political considerations. People of all political faiths are called upon to support their Government through the payment of taxes and are entitled to adequate administrative controls to insure that the dishonest do not shift their share to the honest.

The employees who have been trained in the technical work of tax administration and who have done and are now doing an excellent job are civil service employees. The training of this personnel has been paid for by the Government at great cost and this investment should not now be dissipated. Once these people are released it is not reasonable to suppose that they will be available for reemployment should additional funds be provided later. It will take years to restore the damage done by the failure of the Congress to support the current efforts of our tax collecting agency.

I am advised by the Secretary of the Treasury and the Commissioner of Internal Revenue that the reduction of $20 million in the appropriation for the Bureau of Internal Revenue will mean a reduction in personnel of 4,000 to 5,000 employees and will result in a direct loss of revenue of not less than $400 million in the fiscal year 1948. There is at the present time, with present personnel, a backlog of 30,000 "leads" on tax evasions awaiting investigation.

The vast majority of our taxpayers are scrupulously honest in tax matters. Taxpayer moral is now generally high, but it will remain so only if the odds remain strong that the would-be tax evader will be detected and punished.

It is a fallacy to assume that the reduction can be absorbed without weakening the enforcement activities of the Bureau, because it is not possible to decrease materially the now inadequate number of employees necessary for the routine tasks of tax collection. Tax returns must be recorded and funds deposited even though the returns are never investigated.

It is another fallacy that the workload of the Bureau of Internal Revenue has decreased since the close of hostilities. From a tax collection standpoint the present period resembles in many respects the period immediately following World War I. At that time the Congress appreciated the needs of the Bureau in the matter of meeting its accumulated load of wartime tax cases and provided increased funds commensurate with such burden. This policy was followed for almost 6 years after that war in order that the Bureau might be able to dispose adequately of such cases.

The action which the Congress has just taken fails to recognize the much greater task of tax collection resulting from World War II.