- The Washington Times - Sunday, October 27, 2002

By John A. Andrew III
Ivan R. Dee, $27.50, 397 pages

The power to tax involves the power to destroy," stated Chief Justice John Marshall, prophetically, in McCulloch v. Maryland in 1819, well before the Constitution got stuck with the 16th, Income Tax, Amendment in 1913. Marshall's statement supplies the title of this book by historian John Andrew of Franklin & Marshall College. Sadly, the author died before finishing his important work but a sharp team headed by his widow and sparked by the publisher completed the job.
The result is political dynamite, a tribute to the leverage of the U.S. Freedom of Information Act used here to pry facts from otherwise highly secret Internal Revenue Service files. The result is a sorry story of tax flagrante delicto in dismal action by three modern presidents in a row John Kennedy, Lyndon Johnson, and Richard Nixon.
All three politicized and honed the IRS into a two-edged sword to punish enemies and reward friends in the author's words: "In the years from John Kennedy's inauguration through the impeachment of Richard Nixon, the IRS was more than a tax collector that its auditing and investigative functions targeted individuals and organizations not because of real tax liabilities but for ideological and political reasons."
Thus did Kennedy, Johnson, and Nixon manifest the centralized power so feared by the Founders who wisely stopped an income tax dead in its tracks, per the Constitution's Article 1, Section 9: "No capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken." In other words, only federal head taxes or so much fixed dollars per head were legal.
In 1961 President Kennedy named his brother Robert as attorney general and IRS political machinations became fair game; e.g., in the wake of steel price increases the Wall Street Journal and U.S. Steel CEO Roger Blough charged the IRS with especially scrutinizing the tax returns of steel officials. The White House denied the charge, but U.S. Steel rescinded its price increases.
Donald Alexander, Nixon's IRS commissioner, held that contempt between Federal Bureau of Investigation head J. Edgar Hoover and the Kennedys helps explain why Robert Kennedy used the IRS to circumvent the FBI. In 1961 the Justice Department's Voter Education Project (VEP) set out to get civil rights organizations like the Congress of Racial Equality (CORE) and the Student Nonviolent Coordinating Committee (SNCC), hardly Hoover-favored groups, to band together and boost minority voter registration in the South. IRS commissioner Mortimer Caplin dutifully issued a tax exemption to VEP and foundation money rolled in.
In an August l964 IRS memo to the Treasury Department, Acting IRS Commissioner Donald Bacon marked one group of right-wing organizations in terms of their opposition to "labor unions, government regulation of business, unbalanced budget, Keynesian economics, progressive taxation, and support of states' rights, right to work laws, free market economy, and libertarianism." Included were the American Enterprise Institute for Public Policy Research (whose director William Baroody had actively worked in the Barry Goldwater campaign), the Freedoms Foundation at Valley Forge, the Intercollegiate Society of Individualists, and the Foundation for Economic Education (or FEE, a group with which this reviewer is connected, per below).
At stake was the 501(c)(3) tax-exempt status of these groups. That status was retained, but the fact that these "right-wing" organizations were challenged at all is significant.
Nixon, if anything, was more personal in his resort to the IRS. As White house aide John Dean said in an Aug. 16, 1971, memo, "Dealing with Our Political Enemies," the challenge was "how can we use the available federal machinery to screw our political enemies." The Nixon Enemies List targeted prominent Vietnam War protesters and others as potential tax resisters groups like the Church of Scientology, Gay Liberation Front, the Black Panthers, and individuals like Doris Day, Frank Sinatra, Armand Hammer, and Katherine Graham of The Washington Post, a powerful opposition newspaper.
The Founding Fathers must have rolled over in their graves.

William H. Peterson, adjunct scholar at the Heritage Foundation, is a contributing editor to the Foundation for Economic Education's Ideas on Liberty.

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