How Uncle Mike Jacobs screwed Joe Louis
Before commencing with this anecdote 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.
It is common to paint the United States government as being the sole culprit for Louis’ tax dilemma (by refusing to recognize Louis’ 1942 donations as tax free charity donations,) but as you will see it was not the United States government who caused Louis’ problem, it was Uncle Mike Jacobs.
About the ‘charity’ fights:
Joe Louis donated his entire purse from his 9 January 1942 title defense against Buddy Bear to the Navy Relief Fund, and on 27 March 1942 (a title defense against Abe Simon) once again donated his entire purse, this time to the Army Emergency Relief Organization. But there lies the rub; he donated his ‘purse.’
In an effort to try and find some tax relief for Louis, (who had not been paying his taxes since the late ‘30s) Louis’ manager John Roxborough reached an agreement with the War Department. Louis would fight two charity title defenses with both Joe Louis and his promoter Mike Jacobs donating their earnings to the Navy Relief Fund and the Army Emergency Relief Organization respectfully. Had this agreement been fulfilled, Louis’ donations would not only have been recognized as tax free donations, but also would have brought Louis some relief from his already mounting tax problem.
That is, had Uncle Mike made good on his promise (as Louis did) and donated his share of the take, these fights would have been viewed as charity events and Louis’ donations would have been viewed, by the government, as being tax free, (and subsequently would have had the added benefit of diminishing some of Louis’ already outstanding tax deficit.)
But Uncle Mike Jacobs was of a different mind, and despite his verbal promises to Roxborough and the War Department, never made good on his donations. Because Jacobs pocketed his end of the fights’ receipts, the fights, which were originally considered to be charity events, became instead, for-profit prize fights, thus making Louis’ take of the action a ‘purse’ (income) and therefore subject to taxation. (The United States government does not like being ‘played.’)
In short, Louis got blindsided by Uncle Mike; instead of gaining the tax relief he was hoping for, the two donations/purses (which the taxes had not been paid on) only served to deepen Louis’ already heavy tax burden.
Yet even after these back-to-back fiascos, the War Department (amazingly) was still willing to try and rectify the matter and work with the heavyweight champion, (and even more amazingly was willing to take another shot at working with Mike Jacobs.)
As late as the summer of 1942 the War Department proposed to Louis’ people another charity fight, a Louis-Conn rematch. This time Mike Jacobs would be committed to staging a ‘charity’ event, and Louis’ third donation, (this time a tax free donation) would relieve the champion from the tax burdens connected to his two earlier donations; had this fight occurred the government would have considered this third charitable donation as payment for the back taxes owed on Louis’ earlier donations, and given Louis’ some of the tax relief he was seeking.
But once again it was Uncle Mike, who figured out how to screw-up the deal; unwilling to promote a fight for free Uncle Mike tried to take personal control of ALL the (expensive) ring side seats as ‘comps,’ (actually intending to sell them on the side for personal profit.) Outraged at Jacobs’ duplicity the War Department backed out of the deal and the fight was canceled.
Louis would not have another opportunity to earn a purse until November of 1944, by then Louis’ tax problem had ballooned to a level that was unpayable.
The moral of the story: Don King (aka Satan) has always existed in the fight game, just under different names.