Let 'em Holler - A Political Biography of J. Bracken Lee

Snoopers and looters

15 Snoopers and Looters Throughout his political career Lee demonstrated a deep concern about the federal income tax and its implications for American democracy. He considered the Sixteenth Amendment the "worst thing that's ever happened to this country" and believed that its repeal could have helped to avert both world wars as well as the conflicts in Korea and Vietnam. He angrily labeled the IRS a Gestapo, far worse than that which existed in either Germany or Russia: At least they'd come and knock on your door and take ya out and kill ya or they'd put ya in jail. Your troubles were over. But these people will hound you from the day you file your first return and they'll hound your heirs after you're dead. And I can prove it. I've been audited every year since 1934 -without exception.1 Lee's first encounter with the fnternal Revenue Service came in 1934 when they audited his insurance business. When the auditor arrived Lee resolutely refused to allow him access to his books without a court order. Promptly, the auditor pulled from his pocket a court order, already signed by the judiciary, and coolly placed Lee's name on the appropriate line. Of course, he had no choice but to allow the audit to proceed, but when the auditor announced that he owed an additional $800 Lee was furious. "I said, 'You know that isn't right!' I had a hell of a row with him." Because he doubted the validity of the results, Lee refused to pay and maintained a steady correspondence with the IRS until they finally wrote him a letter of apology. They admitted making a mistake and announced that the sum he actually owed was $80. Still unconvinced, he felt compelled to pay it on the grounds that it would cost more to contest it. Sub­sequently, he addressed all correspondence with the IRS to 177 J . BRACKEN LEE "Snoopers and Looters," and it was always delivered "right to their door."2 It was no surprise, then, that by the 1950s, Lee was taking a public stand on income tax, which led to his authoring the fore­word to a book by Frank Chodorov, The Income Tax, Root of All Evil. In it Lee claimed that the Sixteenth Amendment enabled the federal government to put its hands into the pockets of the people and draw their allegiance away from their local governments. He admonished those who stood for freedom to "concentrate on the correction of the mistake of 1913. The 16th Amendment must be repealed. Nothing else will do."3 Following publication Lee mounted an intensive campaign to interest other politicians in the book's thesis. As a prelude to the 1954 Governors' Conference he wrote letters to several governors and sent them copies of the book. Although a few expressed sympathy for the thesis, they worried about several related prob­lems, such as how federal spending would be apportioned among the states without the income tax, how the government would meet the probability of a state's defaulting on its share,4 and how the government would deal with large national corporations if the states were collecting all the money.5 Lee brushed off these objections impatiently, arguing that they were only minor details that could be worked out later.0 At the Governors' Conference he tried to persuade his col­leagues to go on record in favor of repeal of the Sixteenth Amendment. Lee argued that the states had exclusive rights to the income tax field. In his opinion the federal government should present the states with an annual tax bill; in turn, the states should levy within their boundaries and remit to Washing­ton. Unfortunately, Gov. Arthur Langlie of Washington, who was acting as discussion chairman, pounded the gavel on Lee before he finished making his proposal. Afterward, Lee com­plained that it was an "attempt to muzzle" him, and he demanded a public apology. In spite of the stir at the head table his fiery presentation received a warm round of applause.7 Later, he explained that his motivation was the fear of the consequences 178 SNOOPERS AND LOOTERS of big government, such as had occurred in various totalitarian nations, when power became concentrated in the hands of a few.8 A national sensation overnight, Lee received an avalanche of mostly favorable, laudatory mail, suggesting that he run for presi­dent and declaring that he stood out "like a lighthouse" because of his "valiant efforts in behalf of the American way of life" and his concern for problems outside his own statehouse.9 Then, in October 1955 Lee dropped a bombshell. He for­mally announced his intention to withhold that portion of his federal income tax not already collected or withheld from salary in order to contest the right of the government to use taxpayers' money in foreign aid.10 He placed the money in a trust account at Walker Bank in Salt Lake City with instructions that it was to be paid only on a court order. Although he did not say so at the time, he thought that his position as governor might help him to receive consideration by the courts.11 The next day, officials of the Democratic party in Utah accused him of defying national laws and demanded that he either retract his statement or resign.12 He assured them that he had not assumed the governor­ship to "please the Democratic State Committee."13 Soon the governor's office reported a flood of letters and telegrams from all over the country commending Lee's decision. By December his office reported that 1,500 letters had been received with 99 percent favoring his stand; by May 1956 the number had grown to 3,000.14 But criticism surfaced in other ways. Vandals decorated the governor's mansion with signs painted on the front steps: "We pay you, you pay too," "Pay Up, Brack," and "Grow up, Gov." Lee reacted calmly, calling it "a very good paint job-well above average."15 Almost uniformly the press was critical. The Deseret News observed that there was more than a "trace of suspicion" that Lee was after headlines, and the editors judged those headlines to be detrimental to Utah's dignity. On the other hand, the News did not agree with the "patently ridiculous" claim of his political opponents that he was an outlaw and should resign, for his tax money was set aside in a local bank ready for collection should the courts rule against him.10 179 Left: Lee's running feud with the IRS led to this "very good paint job" in 1956. Left: Presidential candi­date Eisenhower is greeted by Governor Lee during the 1952 GOP campaign. Both men scored resounding victories in the general election. Deseret News photographs. Left: Before his inauguration Lee visited State Capitol offices with Utah Supreme Court Justice Lester A. Wade, left, and Sec­retary of State Heber Bennion, Jr., right. Right: Lee's economy drive made national news in Life, Time, and American magazines in 1950 during his first term as governor. Left: In 1955 Lee signed Utah's open meeting law. Deseret News photographs. J. BRACKEN LEE In a biting editorial the Washington Post called Lee "an intentional tax dodger," unfamiliar with the fact that the found­ing fathers left to Congress the decision as to what is necessary to our national defense. They did not authorize individual citi­zens to withhold their taxes because they might disagree with some policies of the administration: "Even so ardent a foe of education as Governor Lee must have encountered these basic principles at some time in his career." Sarcastically, the Post sug­gested that Lee had burned his political bridges and that Utah Republicans, disturbed at the blight Lee placed on the party, were probably holding their breath for fear he would not go through with it.17 Equally sarcastic in its editorial, the Milwaukee Journal called Lee a "neanderthal politician" who should be dragged "screaming and kicking out of the past and into the 20th Cen­tury." 18 However, David Lawrence, nationally syndicated colum­nist, noted that it was necessary to violate the law and run the risk of penalty to get a court test of constitutionality. He thought Lee was being abused.19 Similar support came from the con­servative Arizona Republic, which congratulated him for being brave enough to speak his mind about all issues. Approvingly, the Republic predicted that Lee would run for the Senate, the vice-presidency, or even the presidency in 1956.20 Not surprisingly, the most glowing tribute came from Frank Chodorov's right-wing publication, The Freeman, which extolled Lee's stand as one of rare courage. Disdainful of the press for picturing Lee as "some kind of maniac," Chodorov compared him to Henry David Thoreau who went to jail for refusing to pay his taxes in Massachusetts.21 In spite of overwhelming public response, Lee expressed increasing doubt that a favorable interpretation would emanate from the courts.22 He insisted that he would still encourage any taxpayer who believed that either state or national appropriations or expenditures were unconstitutional or illegal to instigate court action.23 In a far-ranging speech in Chicago, he said he was "bloodying" his head against a brick wall to test the income tax 182 SNOOPERS AND LOOTERS question in the hope that he could get Americans thinking a little.24 Reaction from Secretary of the Treasury George Humphrey was terse: "We will sue for the money."215 But he later advised Lee by letter that the Supreme Court in the case of Frothingham v. Meldon (1923) had "rejected a taxpayer's attempt to object to congressional appropriations on the ground that tax payments were being used for purposes claimed by the taxpayer to be unconstitutional." Using that precedent, Humphrey warned Lee if he did not pay by April 16 the IRS would proceed to collect it in the "customary and usual manner."20 Lee still refused to pay. True to Humphrey's promise the government attached his bank account in the amount of $1,203.10 without a court order27 and placed a lien on his possessions.28 Although Lee advised bank officials that he would not give his consent to release the funds,20 they replied that they had "no other alternative" than to pay the government from his personal account.30 Lee said that he could have sued the bank, "but what good would it do? Then I'm suing my friends. So I went to the Supreme Court."31 Roland V. Wise, director of the IRS office in Utah, was highly critical of Lee and accused him of publicity-seeking: The constitutionality of the tax had been tested many times before. He did not have a good case or any new issue and, in my opinion, if he wanted to test the law again this was not a very practical or sensible way to do it. He very well knew, and was so informed, that he could file a claim for refund on a Form 843 on any taxes paid during the prior three years. Then after IRS' rejection of the claim, or after six months from filing same, he could proceed with appeal rights up through all court levels, District, Circuit, and the Supreme Court. This procedure is open to anyone who wants to test the IRS Code. We have a self-assessment system, and when a return is filed the fRS must collect the tax so assessed- no delays for court action are permitted. Also, of course, it is against criminal tax law to intentionally not file when a return is due or to intentionally file a false or fraudulent return.32 Wise was unreasonably harsh, especially in his implication that Lee was guilty of violating criminal tax law. David Lawrence 183 J . BRACKEN LEE persuasively argued that no criminal action was involved if the taxpayer made his return and fully disclosed his income, which Lee did.33 Wise thought that the IRS "had bent over backward to deal fairly, carefully, and circumspectly with J. Bracken Lee."34 Of course, Lee recognized the potential for publicity. But political stardom notwithstanding, he sincerely hoped that his position as governor would enhance the case and force a change in the law. He acted on the assumption that a governor might be able to accomplish what a private citizen could not. He assumed that the press would force the government's hand, a realistic view of the role of publicity in advancing a cause. It did not happen that way. Ironically, the press treated Lee so caustically that it was easier for the government to treat him in summary fashion. Perhaps even worse, some journalists were tempted to make him appear the fool. For instance, satirical columnist Art Hoppe described Lee at an amusing imaginary press conference at Conservative Republican headquarters in San Francisco. Besides newspaper reporters, the following were in attendance: the editor of "Economic Liberty," which claimed income taxes were "hys­terically forced on our American people by Politicians and Bank­ing Racketeers," Willie Carto, young executive director of Lib­erty and Property, an organization favoring U.S. withdrawal from the "impotent and subversive United Nations," and a dozen ladies "who could be distinguished from each other by the color of their hats." Lee reported on his refusal to pay income tax and his plan to appeal to the Supreme Court: "When you refused to pay your taxes did they put you in jail?" asked a lady in a militant blue toque. "No," said the Governor, smiling. "Well, they put my husband in jail," she said, beaming proudly. "Wonderful," chorused the other ladies.3" Nevertheless, Lee was genuinely pleased by much of the pub­licity, thinking it had helped to diminish sentiment for foreign aid around the country.3'1 The attachment of his bank account quickened his desire to do battle; he and his attorneys filed an 184 SNOOPERS AND LOOTERS original action in the U.S. Supreme Court to restrain the secre­tary of the treasury from making further foreign aid payments.37 The request for a hearing from the court was originally filed in July 1956; in November the court threw out the tax action, refus­ing to hear the case. Lee replied, "It's my conclusion now that the federal government can violate all parts of the constitution with complete immunity."38 He claimed that it was the only time in American history that the Supreme Court failed to act on a request for a writ of prohibition in ten days or less.3" A new flood of letters poured in, encouraging Lee to con­tinue the battle, but he was discouraged and called it "the end of the line."40 Indeed, it was, at least for his formal battle with the IRS; still, it had unquestionably made him a national figure. He had received numerous letters and telegrams from all over the country, many of them seriously proposing him as a presiden­tial candidate. The publicity unsettled Utahns accustomed to low profile governors who were never considered for national office. State Republican leaders began drawing battle lines for his reelection attempt; 1956 would be the year of decision on Lee's national reputation. His private battle with the IRS continued unabated. In 1960 he mailed his 1040 form early, predicting that it would get closer federal scrutiny than any of the other 60 million tax returns. His earlier publicity had made him an obvious target. He said he had purposely overpaid "to see if they're as aggressive in get­ting my money back to me as they are trying to take it." He claimed that the IRS had started to harass his friends, too. Belatedly, he concluded that they had no power to dig into his private records.41 As mayor of Salt Lake City Lee continued his campaign against the IRS in speeches around the country and in interviews; but he did not attempt court action again. The IRS continued to audit Lee's returns, providing him with adequate fuel for his tirades. In 1969 he started another huge battle over his return when he refused to spend any time with the auditor. Following the audit he received notice that he owed $16,000 in back taxes and was ordered to pay it in ten days. Lee thought that it was a 185 J . BRACKEN LEE false claim, and it made him "so damned mad" that he sought the advice of a district judge. Unhappily, Judge Willis Ritter informed him that there was nothing that could be done about a false claim-a person could not sue. He contested the bill anyway, and the Treasury Department sent an investigator from the fraud division, a "hell of a nice fella," who told him that he knew no fraud had been perpetrated.42 Lee sent a letter of protest to Roland Wise, complaining of harassment. He sent copies to several congressmen and senators, some of whom replied, but "Wise didn't even answer my letter." After an investigation, Lee's attorney reported that according to the government, Lee owed approximately $200 for 1968 and $20 for 1969 and was entitled to a small refund for 1970. "Now," said the attorney, "Can't you think of anything else, so we can make those bastards pay youT' Lee remembered that his mother was a dependent, but he had not claimed her for his returns because he and his brothers and sisters shared the respon­sibility for her support. The attorney informed Lee that since his brothers and sisters had not claimed her as a dependent he could legally do so. According to Lee, when that claim was processed into the entire audit he received a refund for all the years named. This ironic tale was a persuasive example to him of the good citizen being penalized: "Now you tell me that you have freedom when you've got a Gestapo like this? Do you believe in the Bill of Rights? How the hell can you believe in the income tax?"43 In an expression of anger over that investigation, Lee wrote to Wilbur Mills, chairman of the House Ways and Means Com­mittee, calling the IRS "detrimental and un-American." He sug­gested that Congress give consideration to the "decent people of this nation" by allowing them the right to sue for "any injury to reputation or financial loss incurred due to the unlawful and unreasonable harassing" carried out by the IRS.44 The Deseret News enthusiastically supported his proposal with a quotation from a member of the Senate Finance Committee who said, "The average citizen often pays a tax he doesn't owe because he's afraid to resist." The News argued that when the IRS makes a mistake the government should pay for it-not the innocent tax- 186 SNOOPERS AND LOOTERS payer. Allowing the taxpayer to sue for losses as a result of harassment would accomplish that aim and would also help to maintain confidence in the administration of the nation's tax laws.45 In light of IRS abuses revealed under the Nixon administra­tion- punishment of political enemies through the use of the audit-the Lee story is especially significant. Many respected people have questioned the income tax system because of those abuses, frequently referring to it, in David Brinkley's words, as "an instrument of police-state mentality."40 Since the IRS audited Lee almost every year, it could be assumed that no national administration had the crusty, talkative politician on any approved lists. Rather, the evidence indicates that he was harassed and punished through numerous audits and summary treatment of appeals. Ironically, in attacking the IRS, the Lee that his critics pictured as a neanderthal politician was actually ahead of his time; and in denouncing income tax in the 1970s, his voice no longer sounded unique.47 187 J . BRACKEN LEE *Lee interview. 2Ibid. When he ran for mayor of Price, Lee had a minor altercation with the Treasury Department over campaign handbills on which the dollar had been printed with Lee's photograph superimposed to imply that he would save tax dollars According to Lee, a treasury agent came to see him mad as hell and told him it was illegal to produce such a handbill because it was too much like a dollar Incredulous, Lee replied, "You mean there are people so damned dumb they'd think this was real money?" He withdrew the handbills, but as a protest he claimed that he paid a $26.00 installment of his income tax with the handbills to see if the IRS would be "dumb enough" to accept them. Needless to say, they were not. 3Foreword to Frank Chodorov, The Income Tax, Root of All Evil (New York: Devin-Adair, 1954). "Gov. Len Jordan of Idaho to Lee, June 14, 1954, Lee Gubernatorial Papers. 5Gov. Paul Patterson of Oregon to Lee, June 14, 1954, ibid. GLee to Jordan, June 23, 1954, ibid. 'Deseret News, July 13, 1954. 8Lee to Guy L. Deano, August 11, 1954. Lee expressed the same thought in a letter to Dr. M. K. Blanchard, Mount Olive, 111., August 11, 1954, Lee Gubernatorial Papers. 9J. S. Kimmel, Sr., president, Davenport, la., Chamber of Commerce, to Lee, October 13, 1954, and William R. Todd, Jr., Cincinnati, O., to Lee, July 29, 1954, ibid. 10Deseret News, October 7, 1955. nLee interview. "Deseret News, October 8, 1955. "Salt Lake Tribune, October 8, 1955. 14Lee to Prof. William H. Peterson, New York University, December 13, 1955, and Lee to Col. Slavko Trifkovick, Winchester, Eng., May 23, 1956, Lee Gubernatorial Papers. 15Deseret News, May 31, 1956. ^'Deseret News, October 10, 1955. "Washington Post, October 9, 1955. ^Milwaukee Journal, October 12, 1955. "Lawrence's column appeared October 10, 1955, in the Milwaukee Journal and October 12, 1955, in the 5a/; Lake Tribune. Lawrence pointed out that if Lee lost his court case the federal government might even "make some money on him" by levying a 6 percent interest charge on the overdue tax bill. 20Arizona Republic, October 16, 1955. The Oregon Journal, October 13, 1955, characterized Lee as something of a hero with a refreshing record in Utah. However, the editors strongly dis­agreed with his tax stand and feared that his judgment and sense of proportion had been damaged: "If some of his own constituents followed his example by going on a tax strike, where would that leave Utah government?" The Worcester (Mass.) Telegram, October 12, 1955, accused Lee of evading taxes and sug­gested that if all citizens did similarly the country would be reduced to anarchy in short order. The Los Angeles Minor-News. October 11, 1955, called his action "strange reasoning" and added that he was playing with fiscal fire on the state level should his own citizens also refuse to pay state taxes. '--'The Freeman (Irvington, N.Y.), October 22, 1955. 22J. Bracken Lee to Fellow American, form letter sent to all those who wrote to him about income taxes, October 1955, Lee Gubernatorial Papers. 188 SNOOPERS AND LOOTERS 23Lee to Dr. Mai Rumph, Fort Worth, Tex., January 13, 1956, ibid. 24J. Bracken Lee, "An Executive's Responsibility in Government-Political Misappropriation of Tax Money," speech delivered to Executives' Club of Chicago, January 6, 1956. 2SDeseret News, January 16, 1956. 2,iSalt Lake Tribune, April 14, 1956. "Deseret News, May 7, 1956. 2*Deseret News, April 30, 1956. 29Salt Lake Tribune, May 3, 1956. 30Salt Lake Tribune, May 4, 1956. 31Lee interview. 32Roland V. Wise, district director, IRS, to author, November 20, 1975. The procedure Wise referred to was outlined in an IRS pamphlet, The Collec­tion Process, p. 6, produced in January 1974. Following the government's action critics pounced on Lee with renewed vigor. Salt Lake County Attorney Frank E. Moss accused him of using a "poli­tical gimmick" and asserted that any first-year law student knew the clear ave­nue to test the law: "If the governor had paid his tax under protest at the time he filed his return, he could have filed an action in the U.S. tax court and had a hearing on the tax legality." (Deseret News, May 5, 1956.) Later, as a U.S. senator, Moss remained convinced that publicity surrounding the case was detri­mental to Utah: "I'm often asked whatever happened to that crazy fellow who wouldn't pay his income tax." In Moss's view, "Lee was really an anachronism -an angry, unreasoning voice out of the past." (Moss to author.) 33Lawrence column. In a letter to Eisenhower, January 13, 1956, Lee said, "I am not attempting to avoid payment of taxes, but am simply using this means to bring a constitu­tional question before a federal court." Lee Gubernatorial Papers. See also Salt Lake Tribune, January 14, 1956. 34Wise to author. Although Wise refused to comment on the specific cases described by Lee (because he was forbidden to do so as a tax official), he did not deny Lee's story. Asked about Lee's refunds, Wise said: "To my recollec­tion, Mr. Lee has stated to the public and the press that he has received refunds on occasions from the IRS." 35Art Hoppe, "Gov. Lee vs. the Income Tax: Lost His Sugar in Salt Lake City," San Francisco Chronicle, August 24, 1956. 36Lee to Mrs. Louise Davis, San Antonio, Tex., May 21, 1956, Lee Guber­natorial Papers. 37Lee to Gus Reynolds, Pueblo, Colo., May 25, 1956, ibid. See also Sail Lake Tribune, May 8, 1956. 3SDeseret News, November 13, 1956. 39Lee interview. 4°Lee to Harold J. Olson, Milwaukee, Wis., November 19, 1956, Lee Gub­ernatorial Papers. 41 Arkansas Gazette, May 1, 1960. 42Lee interview. 43Ibid. Lee was so incensed by the investigation that he wrote the U.S. attorney general and requested an investigation of the IRS. He received "the snottiest damn letter from Henry Peterson," assistant attorney general under Nixon, implying that Lee was a troublemaker. Lee sent copies of the letter to some twenty congressmen and senators as an example of a bureaucrat's treat­ment of a citizen. He suggested that Peterson should be fired. Lee quoted Barry Goldwater as expressing surprise that a person of Lee's experience would 189 J. BRACKEN LEE think that Congress was running the country: "You know the Bureaucrats are running the country!" Roland Wise refused to comment on this case. Wise to author. 44Deseret News, March 25, 1971. 4'°Deseret News, April 15, 1971, editorial. 40David Brinkley, NBC Nightly News, July 16, 1974. 47In an ironical twist, Lee decided to endorse a computerized tax service called Taxman. Beginning in 1975 ads in Salt Lake City newspapers pictured Lee speaking about taxes. The heading stated: "Finally. Brack Lee has a good word to say about income taxes . . TAXMAN." Then Lee was quoted: "Don't get me wrong, I still think the income tax is unconstitutional. "But I do have to pay my taxes, so I want to make sure I get every legal deduction I'm entitled to. And I want that return to be accurate, because I don't want any more hassles with the IRS. If you feel the same way, you ought to find out about Taxman. "Taxman is a new computerized income tax service. They'll help you search out every possible legal deduction. They're fast, accurate and inexpen­sive. And they'll tell you in advance what the cost will be. "Now that I'm retired, I can use a tax break. And Taxman is a tax break EVERYONE can use." Deseret News, February 10, 1975. 190