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Before commencing it is proper to note that Joe Louis’ tax dilemma started long before the infamous ‘charity’ fights of 1942; Louis was not the innocent he is often painted as, he had not been making good on his tax burden as early as the Braddock fight and by 1942 was already in a deep tax hole.
The argument here is that the real culprit stopping Joe Louis from gaining tax relief from his 1942 donations wasn’t the US government, but instead Uncle Mike Jacobs. The government was trying to work with Louis; Uncle Mike wasn’t trying to work with the government.
About the charity fights:
Joe Louis donated his entire battle money (purse) from his 9 January 1942 title defense against Buddy Bear to the Navy Relief Fund, and then on 27 March 1942 in a title defense against Abe Simon, while in uniform, once again donated his entire battle money (purse), this time to the Army Emergency Relief Organization.
But there lies the rub; he donated his ‘purse.’
In January of ’42 trying to find some tax relief for Louis, with Louis’ induction eminent, manager Johnny Roxborough reached an agreement with a War Department representative, Thurman Gibson. (It was in the best interest of both parties if Louis was to enter the military tax debt free.) The plan was for Joe Louis to fight two title defenses, with Joe Louis, Johnny Roxborough, and promoter Uncle Mike Jacobs ALL donating their earnings to the NRF and the AERO respectfully. The fights were to be ‘charity events.’ Had this occurred an agreement with the IRS would have been fulfilled and Louis would have been relieved of much of his tax debt. Louis would have gotten credit for all of the donations.
But by mid-summer the tax situation muddied. Neither Roxborough nor Jacobs came across with their donations, (both took profit) and worst yet Jacobs (for his own tax benefit) paid Louis a ‘purse.’ This meant, while Louis’ donations did count toward paying off his outstanding tax debt as agreed, the IRS now claimed Louis was subject to new taxes on the money he had just earned.
The IRS didn’t see the fights as charity events, (and maybe felt like Uncle Mike had played them). The IRS claimed Louis’ purse was taxable income; under these conditions Louis should have paid his taxes first and then donated the rest. Whether the IRS was being a dick or not is open to debate, but it wasn’t the IRS who broke the deal.
Louis got blindsided, not by the IRS, but by his manager Roxborough (a former bookmaker and possible pimp) and Uncle Mike (a promoter) who failed to make good on a promise (to the War Department) to stage a charity event (Guess charity just wasn't in Mike Jacob's nature.)
Yet even after these back-to-back fiascos, the War Department amazingly was still willing to try to rectify the matter and got the IRS to work with the heavyweight champion one more time, (and even more amazingly got the IRS to work with Mike Jacobs one more time).
In the late summer of 1942 the War Department (Thurman Gibson again) proposed to Louis’ people one last shot at a ‘charity fight,’ the much anticipated Louis-Conn rematch. This time Mike Jacobs would be publically committed to staging a ‘charity’ event, with ALL the gate receipts going to charity. With an anticipated million dollar gate, both Louis and Conn would be relieved of their tax burdens. (Conn was signed with Jacobs, Conn had tax problems.)
The contract was officially signed on September 22nd and the fight set for October 12th, 1942. Everyone was in (almost).
Just a day or two later it was leaked to the press that both Louis’ and Conn’s contracts contained clauses where some gate receipts would be used to pay off private debts as well as tax debts. Jacobs was at it again, the two recipients of the private debt pay-offs were none other than Mike Jacobs and John Roxborough. They attempted to divert $136,000 from the charity fund into their own pockets. Furthermore it then surfaced that Jacobs had held back 200 ringside seats as well, claiming he needed them for comps.
It became a media **** storm culminating with Southern Senators taking to the floor of the US Senate and asking: ‘With American boys dying at Guadalcanal why was the War Department working so hard to bring tax relief to one wealthy individual?’ (Louis’ name was never mentioned.)
With the press and the ‘blue dawg senators’ clipping at his heels Secretary of War Stimson folded, the fight was canceled. Stg. Louis and Cpl. Conn where placed on active duty and the money returned.
Louis wouldn’t be able to fight for money again until ’45 and with the high tax rates of 1945 – 46 eating up the last few paydays he had, he was never be able to get himself out of tax debt.
The public got to see Louis-Conn II four years too late.
The argument here is that the real culprit stopping Joe Louis from gaining tax relief from his 1942 donations wasn’t the US government, but instead Uncle Mike Jacobs. The government was trying to work with Louis; Uncle Mike wasn’t trying to work with the government.
About the charity fights:
Joe Louis donated his entire battle money (purse) from his 9 January 1942 title defense against Buddy Bear to the Navy Relief Fund, and then on 27 March 1942 in a title defense against Abe Simon, while in uniform, once again donated his entire battle money (purse), this time to the Army Emergency Relief Organization.
But there lies the rub; he donated his ‘purse.’
In January of ’42 trying to find some tax relief for Louis, with Louis’ induction eminent, manager Johnny Roxborough reached an agreement with a War Department representative, Thurman Gibson. (It was in the best interest of both parties if Louis was to enter the military tax debt free.) The plan was for Joe Louis to fight two title defenses, with Joe Louis, Johnny Roxborough, and promoter Uncle Mike Jacobs ALL donating their earnings to the NRF and the AERO respectfully. The fights were to be ‘charity events.’ Had this occurred an agreement with the IRS would have been fulfilled and Louis would have been relieved of much of his tax debt. Louis would have gotten credit for all of the donations.
But by mid-summer the tax situation muddied. Neither Roxborough nor Jacobs came across with their donations, (both took profit) and worst yet Jacobs (for his own tax benefit) paid Louis a ‘purse.’ This meant, while Louis’ donations did count toward paying off his outstanding tax debt as agreed, the IRS now claimed Louis was subject to new taxes on the money he had just earned.
The IRS didn’t see the fights as charity events, (and maybe felt like Uncle Mike had played them). The IRS claimed Louis’ purse was taxable income; under these conditions Louis should have paid his taxes first and then donated the rest. Whether the IRS was being a dick or not is open to debate, but it wasn’t the IRS who broke the deal.
Louis got blindsided, not by the IRS, but by his manager Roxborough (a former bookmaker and possible pimp) and Uncle Mike (a promoter) who failed to make good on a promise (to the War Department) to stage a charity event (Guess charity just wasn't in Mike Jacob's nature.)
Yet even after these back-to-back fiascos, the War Department amazingly was still willing to try to rectify the matter and got the IRS to work with the heavyweight champion one more time, (and even more amazingly got the IRS to work with Mike Jacobs one more time).
In the late summer of 1942 the War Department (Thurman Gibson again) proposed to Louis’ people one last shot at a ‘charity fight,’ the much anticipated Louis-Conn rematch. This time Mike Jacobs would be publically committed to staging a ‘charity’ event, with ALL the gate receipts going to charity. With an anticipated million dollar gate, both Louis and Conn would be relieved of their tax burdens. (Conn was signed with Jacobs, Conn had tax problems.)
The contract was officially signed on September 22nd and the fight set for October 12th, 1942. Everyone was in (almost).
Just a day or two later it was leaked to the press that both Louis’ and Conn’s contracts contained clauses where some gate receipts would be used to pay off private debts as well as tax debts. Jacobs was at it again, the two recipients of the private debt pay-offs were none other than Mike Jacobs and John Roxborough. They attempted to divert $136,000 from the charity fund into their own pockets. Furthermore it then surfaced that Jacobs had held back 200 ringside seats as well, claiming he needed them for comps.
It became a media **** storm culminating with Southern Senators taking to the floor of the US Senate and asking: ‘With American boys dying at Guadalcanal why was the War Department working so hard to bring tax relief to one wealthy individual?’ (Louis’ name was never mentioned.)
With the press and the ‘blue dawg senators’ clipping at his heels Secretary of War Stimson folded, the fight was canceled. Stg. Louis and Cpl. Conn where placed on active duty and the money returned.
Louis wouldn’t be able to fight for money again until ’45 and with the high tax rates of 1945 – 46 eating up the last few paydays he had, he was never be able to get himself out of tax debt.
The public got to see Louis-Conn II four years too late.
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