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Lawrence Reed Columnist

Published Thursday, January 24, 2013

The Brown Bomber verses the tax man

Do you remember the most famous fight for the world heavyweight boxing title between Detroit’s Joe Louis and Max Schmeling of Germany? If you do, you’re up there. It was in 1938. It was a rematch that Louis, known as the “Brown Bomber,” won in just 124 seconds.

Another fight that Louis waged is less well known. It was with the Internal Revenue Service. As we do in our day, Louis had to contend in his with a president whose fingers itched to get into the pockets of wealthy Americans. I first learned of this story from historian Burton Folsom, author of the superb book “New Deal or Raw Deal?”

In 1935, President Roosevelt pushed Congress to raise the top income tax rate to 79 percent — then later to 90 percent during and after World War II. In the war years, Joe Louis donated money to military charities, but the complicated tax laws wouldn’t allow him to deduct those gifts. Although Louis saw almost none of the money he won in charity fights, the IRS credited the full amounts as taxable income paid to Louis. He had even voluntarily paid back to the city of Detroit all the money he and his family had received in welfare years before but that counted for nothing with the feds.

Louis retired as heavyweight champion in 1948 but his tax debt was approaching $500,000. After an IRS ruling in 1950, it began accumulating interest each year. Louis felt compelled to come out of retirement in 1950 to fight Ezzard Charles, the new champion. After the fight, his mother begged him to stop but, he said, “she couldn’t understand how much money I owed.... The government wanted their money, and I had to try to get it to them.”

The next year, Louis fought Rocky Marciano and lost. The fight earned him $300,000. With a 90 percent tax rate, what he had left was peanuts, but he gave it all to the government. When his mother died in 1953, the IRS swiped the $667 she left him in her will. With interest compounding, his debt by 1960 had soared to more than a $1 million.

According to Folsom, “Louis refereed wrestling matches, made guest appearances on quiz shows and served as a greeter at Caesar’s Palace in Las Vegas — anything to bring in money” for the IRS.

The notorious mobster Frank Lucas (still living today at 82) was so disgusted with the IRS treatment of Louis that he once paid a $50,000 tax lien against the boxer. Even Max Schmeling came to the rescue, assisting with money when Louis was alive and then paying funeral expenses when the boxer died in 1981.

Joe Louis, a decorated Army veteran and athlete, remained a symbol of black achievement in spite of his tax troubles, which finally came to an end when the IRS settled. When Louis died, President Reagan waived the rules to allow for him to be buried in Arlington National Cemetery with full military honors. He was a hero in more ways than one.

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(Lawrence W. Reed, a resident of Newnan, is president of the Foundation for Economic Education in Irvington, N.Y., and Atlanta.)

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