Flashback: “We Work Again”

Posted: November 24, 2008 in Economy, Politics, Remember

Break out those work gloves and shovels!

President-elect Obama has been pledging to put Americans back to work by retracing some of the same steps taken by FDR and his New Deal. Trust me, I am going to revisit this whole topic once he takes office. But for now, check out this clip as it makes the claim about government pulling Blacks out of poverty thanks to FDR’s work programs.

I was reminded of a post I did way, way back in ’04 on boxer Joe Louis. For some reason part of the text of that post has been corrupted. Fortunately, I was able to find the original link to the featured article of that post. Here is part of that article.

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From: “Joe Louis vs. the IRS”
by Dr. Burton W. Folsom

[…]

In 1914, the year Joe Louis was born, the income tax had only been in place one year. The top rate was a mere 7 percent, and a high exemption kept most Americans off the tax rolls altogether. Even by 1931, the year Joe Louis began boxing seriously, the income tax was so minimal that only 2 percent of Americans even qualified to pay it.

When he earned over $371,000 in his first two years as a professional boxer, Louis immediately helped family and friends all over the country. For example, he voluntarily paid back to the government welfare payments his stepfather had received during the Great Depression. Later, he supplied a house for an elderly Indian on property he owned. He also bought needed uniforms for a group of black army officers.

Louis wanted private citizens to solve many of the problems that Americans were increasingly turning to government to solve. He opposed many of President Franklin Roosevelt’s New Deal programs and campaigned for Republican candidate Wendell Willkie for president in 1940. Before the election, Louis sent Willkie this telegram: “Win by a knockout. It will mean freedom from the WPA and for American Negro rights.” Meanwhile, tax rates from the ever growing government that Louis opposed were heading toward the stratosphere.

One month after the bombing of Pearl Harbor, the generous Louis gave his entire $65,200 fee (about $700,000 in today’s money) from a fight to the Naval Relief Fund. Less than three months later, he gave his $45,882 purse from another fight (about $500,000 today) to the Army Relief Fund. Ever the patriot, he halted his lucrative boxing career and enlisted as a private, earning only $21 a month.

When the war ended, Louis hoped to retire from boxing with savings in the bank and dignity from his career. He lost both. What he overlooked was the enlarged role of government and the taxes he owed to help keep it growing. Under President Roosevelt, the tax base had expanded to where most American families (not the mere 2 percent of a few years before) had to pay income taxes. Worse for Joe Louis was the steep tax levied on high incomes. From 1931, his first year in boxing, to 1937, when he knocked out Braddock, the top marginal tax rate had soared from 24 to 79 percent. Louis found himself owing the government most of his purse money from each of his fights.

During the 1940s, the top marginal rate was hiked to 90 percent, and Joe Louis found himself over $500,000 in debt to the IRS in back taxes. Roosevelt’s new tax laws were complicated and Louis, unlike later successful athletes, had no tax shelters, municipal bonds, or clever accountants. The IRS would not let him deduct the two fight purses he had donated to the army and navy. He couldn’t even deduct $3,000 worth of tickets that he had bought for soldiers to one of those fights. What’s more, the interest payments were compounded each year, ballooning his debt into seven figures during the 1950s.

Louis retired in 1949, undefeated as a champion, but now he had to fight again. “I had to keep working to pay taxes,” Louis said, “but the more I worked, the less I had.” (more…)

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Comments
  1. When the man in the film said they were getting rid of old fire traps to make way for…I thought he was going to say new fire traps.

  2. Give it a rest says:

    Ignore the tax law
    Trust your finances to “friends”
    &
    Spend your money unwisely

    Ask me this is a recipe for exactly what happend to Joe Louis and the countless other individuals that have made a fortune and lost it in America.

    Let be honest and fair here and admit that FDR did very good thigs with all of the tax money he collected. He created SSI, built up the infrastruture of a larger part of this country, and he also paid for our part in a world war as well as subsidzing our allies.

    I like Joe Louis and admire his accomplishments but this story is about his ignorance regarding money and wealth more so than a story about bad and/or greedy government. One gets the impression that JL was handling his affairs without a good accountant and lawyer. Needless to say he got burnt.

  3. Let’s be fair. The government (as far as I can tell from this article, I could be wrong) didn’t cut the man a break, even after he used HIS OWN resources for the good of the country. Regardless of what he did or did not do to secure his own wealth for the future, that has not bearing on how he should have been treated.

  4. Give it a rest says:

    The question that needs to be answered is are the Navy and Army Relief Funds private or public? If they were private JL could have easily been involved in a scam.

    The point being you need to find out what you are doing before you do it.

    Not saying it is the case here but it is very easy to cover up a crime by pretending you are doing a good deed.

  5. That’s fair enough.

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