Joe Louis - Taxes and Financial Troubles

Taxes and Financial Troubles

Despite Louis's lucrative purses over the years, most of the proceeds went to his handlers. Of the over $4.6 million earned during his boxing career, Louis himself received only about $800,000. Louis was nevertheless extremely generous to his family, paying for homes, cars and education for his parents and siblings, often with money fronted by Jacobs. He invested in a number of businesses, all of which eventually failed, including the Joe Louis Restaurant, the Joe Louis Insurance Company, a softball team called the Brown Bombers, Joe Louis Milk Company, Joe Louis pomade (hair grease), Joe Louis Punch (a drink), the Louis-Rower P.R. firm, a horse farm and the Rhumboogie Café in Chicago. He gave liberally to the government as well, paying back the city of Detroit for any welfare money his family had received.

A combination of this largesse and government intervention eventually put Louis in severe financial straits. His entrusting of his finances to former manager Mike Jacobs haunted him. After the $500,000 IRS tax bill was assessed, with interest accumulating every year, the need for cash precipitated Louis's post-retirement comeback. Even though his comeback earned him significant purses, the incremental tax rate in place at the time (90%) meant that these boxing proceeds did not even keep pace with interest on Louis's tax debt. As a result, by the end of the 1950s, he owed over $1 million in taxes and interest. In 1953, when Louis's mother died, the IRS appropriated the $667 she had willed to Louis. To bring in money, Louis engaged in numerous activities outside the ring. He appeared on various quiz shows, and an old Army buddy, Ash Resnick, gave Louis a job welcoming tourists to the Caesars Palace hotel in Las Vegas, where Resnick was an executive. For income, Louis even became a professional wrestler. He made his professional wrestling debut on March 16, 1956 in Washington, D.C., defeating Cowboy Rocky Lee. After defeating Lee in a few matches, Louis discovered he had a heart ailment and retired from wrestling competition. However, he continued as a wrestling referee until 1972.

Louis remained a popular celebrity in his twilight years. His friends included former rival Max Schmeling—who provided Louis with financial assistance during his retirement—and mobster Frank Lucas, who, disgusted with the government's treatment of Louis, once paid off a $50,000 tax lien held against him. These payments, along with an eventual agreement in the early 1960s by the IRS to limit its collections to an amount based on Louis's current income, allowed Louis to live comfortably toward the end of his life.

After the Louis-Schmeling fight, Jack Dempsey expressed the opinion that he was glad he never had to face Joe Louis in the ring. When the Brown Bomber fell on hard financial times, Dempsey served as honorary chairman of a fund to assist Louis.