The Hemisphere: Tax Sermon

At the Bogotá development conference early in September, the U.S. promised an emergency $500 million to help troubled Latin America ease poverty, but held that the bulk of development cash must be raised by Latin America itself through “effective monetary and fiscal policies.” What the U.S. hinted at—tough taxation—was translated into plain words last week in a speech in Brazil by Washington’s Ambassador to Rio, John Moors Cabot.

Nettled at the blithe hypocrisy by which many rich Latin Americans blame Uncle Sam for the absence of hospitals and schools that they themselves resist paying for, Cabot pointed out that U.S. income taxes run up to 92%. The U.S. taxpayer, he said, “is bound to question why his Government should ask a greater percentage of his earnings—partly for Brazil’s development—than the Brazilian government asks of a Brazilian taxpayer with equivalent income.”

The criticism applies to much of Latin America, where, through law, influence and tax-dodging, the rich still enjoy relatively low taxes. Brazilian wage earners cannot avoid payroll deductions, but only 340,000 of 4,000,000 independently employed, such as doctors, farmers, lawyers, even filed returns in 1959.

A frosty-faced, warmhearted, 6-ft. 5-in. Boston blueblood (and cousin of G.O.P. Vice-Presidential Candidate Henry Cabot Lodge), John Moors Cabot lost a job once because he just as bluntly urged that his country give more to Latin America. Two weeks before the 1954 Inter-American Conference in Venezuela, he clashed with the late Secretary of State Dulles and Treasury Secretary George Humphrey, who believed that private investment should provide most of the money in Latin America. At the time, Cabot was already warning of “hard, ugly facts” in Latin America: “The peoples to the south of us are aflame with determination to improve their material lot.” He still thinks they should have help—while not failing to help themselves.