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![handle is hein.tera/taxfeaturs0016 and id is 1 raw text is: Special 23rd National Tax Conference Issue
January 1972,
Vol. 16, Number 1
INMONTHLY TAX FEATURES
Copyright 1972 by Tax Foundalion, Inc., 50 Rockefeller Plaza, New York, N. Y. 10020
r
While Tax Foundation Chairman Alger B. Chapman looks on,
Wiillian MlcC. Martin, TF Trustee and former Chairman, Federal
Reserve Itoard, presents the Foundation's Award for Distinguished
Public Service to Paul W. McCracken, Chairman, Council of Eco-
tintiic Advisers, at the organization's 34th annual dinner.
Seeks Halt in Pension Rise
After ctincg the enorsous
growth inc hott Itccttsbers of
eneficiaries ilt-jind costs of-
Ptbllic entployce's pesion sys.
tects, ltel. Martha Griffiths
(D.-Mich.) urged Aitericans to
wake otc aid make strong oh.
jections tI these pensions.' Ad.
dressing atte ndees at ax
Foundation, Inc.'s 23rd Na.
tional Tax Conference lunch.
con sessiotin. Mrs. Grillths said:
'eoplie cnst awaken to tie
tax burden that is being placed
ott tie average taxpayer by
tlese retirement systems.
It is totally nfair ill my
jcudgntent to give a public
scorker a pension after 20 or
h0 years of work. That is so
IRigt hIac you are, in effect,
fpaving for acht job to be (lone
two or three Ittnes . .tile
econoly cannot stad i t.'
The trend% and develop.
csetts ill tnlblic eltplocee
retirece t plans, tte granting
of lileral (tre hsenefits, she
said, stores til a vast, inineas-
trecd i roblen for the fcture.
More 'Voluntarism' In
Plans Urged by Ture
Act examination of involns.
tary pension programs-wheth.
er pIblic or prviate-against
tile criteion of elficiency, de.
clared Norman I. litle, Vasl.
iti:ton, D.C. economic con.
stilant, indicates that neither
today is desirable.
It is diffictlt, lie said to tn.
dirstand the contintig cot-
cern with integrating of private
retirement plans with Social
Secll ity.
Adthessitg the 231d Nation-
al Tax Conference sponsored
by Tax Follcndation, Inc., Totre
sail: 'To te it seetts a clear
case of bart before the horse.
lie speaker said ttate felt
i1e lrinipal concernt of lcl)lic
polity southc be to Hasve bothl
ji.thnlt' acd p.,rivate a elstcos
clttser to vohitaris.. ttat nos
Is tie case.
Instead of pressuring pri.
vate systenms to conforms iore
closely with tle principles of
Social Security, lie said, ptb-
lic policy should focus otn the
possibilities of expanding the
choices or participants It pub.
liC and private programs, of
diversifying tile oirtios avail-
aile to them wit respect to
The speaker noted that titere
are about 15 million public em.
ployees in the natios covered
under one or more of almost
2,200 pensiont sytems. Site said
she estittiated tice total of pres-
cit beneficiaries mnst be at
least 3 nlcillion or more, of
whom over I illion are re-
tired tnder Federal civilian
programs.
Sometling over another rtil.
lion, site said, are tnder state
and local programs, and about
900,000 under military retire-
lent programs.
At present, said Mrs. Grif-
fiths, total dollar benefiLs io-
der Federal civilian acid mili.
tary isrograss, plus state and
local prograts, and under bet.
ter Social Sectriy benefits for
iuhlic employees, amonot to
between $15 and $20 billion
annually.
Charles T. Fisher, Ill, Exec,
ttive Vice President. National
Bank of Detroit, was Clairman
of tile session.
how touch, in what fort, and
for ;viat kinds of retirement
income they save. Mr. Ture,
antI other Conference after-
nortmc speakers were introduced
iy Chairman jean NI. Lind-
cerg, Senior tice Presklent,
The Clase Manlattan lank.
Weigh Vesting Urges
Paine; Fears Add-ons
Speaking at n panel discus-
sion session of Tax Fondia-
tion's 23rd National Tax Con-
ference, Thomas I-. Paine
i ged that busiltesslten cots-
sider accepting a Federal pen-
sion vesting bill welle it is
proposed.
It seems to toe, said Mr.
Paine, a partner in the firm of
Hewitt Associates, consultants,
se are consing to a crisis
point - thtat 1972 is the last
year where you can pass a vest-
titg bill througlh the Congress
wsithout sontetling else going
along with it. fie added:
If we are willing, as busi-
iess, to consider a vesting
standard, I don't tink we have
very tuch time to do it with-
ont having hooked on to it a
lot of thitigs like reinscrance,
or finding stansdatlds, or other
things thtat we tay find ess
desirable.
Nixon Praises McCracken
I wholeheartedly applaul
the wisdom of lite Tax
Foundation its selecting Dr.
Paul McCracken for your
1971 Distinguished Public
Service Award.
/it these words, President
Nixon began a telegram to
Alger B. Chapman, Fouoda.
lion Chairman, at the re.
search orgasiatian's 3ith
attal dinuser itt New York
City on November 30 where
McCracket, Chairman of
,ie Council O/ Economic
Advisers received 7F's award
acd was lihe principal
speaker.
1 have been extremely
gratelnlto'PaolMcCracken,
lie telegram said, for his
tise cocnsel and his com-
plete dedication to our na-
lion't welfare.
See Danger In
Expanded Aid
If the expansionist goal of
Social Security was achleved,
there would be little need for
private pension plans, life in.
surance and any other form of
individual long-range savings
otler than perhaps home own-
ertship, Robert I. Myers, told
attetndees at the 23rd National
*rax Conference.
The former Chief Actuary of
the Social Secirity Administra.
tion, now Professor of Actnrial
Science, Temple University,
described the expansionist
philosophy in te security
field ths:
Under this, the simplistic
aliproact is taken that sitce
reasosaly complete economic
security is advisable for all,
why not have the government
do It... ?
Tle greatly increased taxes
required under tle expansion-
ist philosophy- whether direct,
visible payroll taxes or indirect
tlrouch the gos'ernment col-
trihuton approach would,
said Dr. Myers, 'have signficant
ecoiotnic anti pyschological
effects.
Says Pension Coverage
Growth Rate Slowing
Whether the size of ite na-
tion's work force covered in
private pension plans amounts
to 50 or to 70 percent, declared
Dr. Daniel NI. Holland, the
fact still remains that the rate
of coverage growth has slowed
sulstantially its recent years.
Addressing tlte 23rd National
Tax Cotferece scotsored by
Tax Foundation, Itc., Dr. Hol.
land, Professor of Economics
at MIT, said:
Tie dlisturbing t hing is that
the percentiage [of those cov-
eredihas remained tle satte
over the last eight or ten years.
Tie percentage has no longer
grown . . . the rate of growts
has slowed d]own substantially.
And there are a lot of people
not covered by pension plans.
fie added: There are many
peole wltose contrilutions to
tbe value of otput is so low,
that they must receive all of it
curently or they wothl tot
have etotgh to live on...
TFs 23rd National Tax
Conferece theme was Fi.
naacing Reticenient-Public
acid Private. Excerpts trom
speakers' topics appear in
tbii MTF.
'Uncontrollable' US Outlays
Up 57%, Notes McCracken
Concern over declaring a fiscal dividend to eliminate fiscal
drag in tbe sixties, may be replaced it the 1970's with concern
for a fiscal mortgage as uncontrollable Federal outlays outrun
revenues, Paul 'V. McCracken, Chairman of the Council of
Economic Adviser sarned in his address to the 3thh Anial
Tax Foundatiun dinner itt New
Warns Sound ,posto e i
'retdl onctnl his pst at
Plans a Must
Private pensions funds have vice. lie is a trustee o the
to be soundly conceived and Foniation.
adnistered 1i the interests of 'Tie pcaradox ol the scats
the benefit-clpcendent workers ahead, lie tieclated, Iliaycil
for if they are not, the failure be chat at a time wilc se talk
is acn encoutragenment to pro- about oucr interests generally
insents of all expansionc of tnrng toweaid itlctAinwtili l
isublic pension benefits. hlitngs, tie ecotocy will lie
TIis svas the warning gier laborij strider particti:.rly
atiendees at [Tax Fonnd1tion iceavy (cec:lllcils clln its I n-
Inc.'s 23rd National Tax Cotn- llttiee resources ,
ference by Dr. Charles Moeller 'And,' Ie contiticd, ,ie
Jr., Vice President and Econ- bsdgeary ocess is a patI ol
oiiss of tlce Metropolitan Life this pltecttnenon. A decade
Inscrance Conmpany. He added: ago, ticere was cOlsciern that if
Probably the greatest single we di nit overtly take actico
danger to the viability of the to declare ait annual fistal div-
private pension systemi - and identl - tloigh tax recnliions
one whiclh builds up pressres or increased spendilg - a fiscal
for expansion of public pen- drag wohl develop.
tions, - is the continuation of In the dec atle of the 1970's,
the inflationary spiral of the the iroblem is more nearly
last several years. going to be that ol a fiscal
He declared that as these in- mortgage as built-in in:teases
flationary forces made them. in Federal programs cecid to
selves evident and proposals onlrnn the anncal increcent
were heart] for expanding ic revenues that normal cco-
public pension programs and nomic growth will yield frot
loosenting of cost control, we any given tax system.
cannot caie a feeling of un- The speaker noted that front
casihess. The record of signil- fiscal 1967 to 1971, Federal oct-
leant liberalization [of Social lays of a relatively uncontrol-
Security benefits, etc.) at two. able type increased 57 percent,
year intervals has created a while total outlays intcreased
climate which builds tip similar 31 percent and the Gross Na-
expectations for the future. tional Product rose 27 percnt
Costriboting to this feeling These uncontrollable out-
of uneasiness, said Dr. Moeller, lays, said Dr. McCracken, now
is the notis of raising added accont for over tiothirds of
fhnds for the Social Seccrity the total [Federal] budget.
system- in whole or in part - He noted tcat the govern-
from fIte Federal governnent's ment was ;dso making large
general revenles, colnnttlicetis fcr cse of our
Dr. Moeller and other iorn- productive resources heyond
Ing Conferectre session speakers the hntldet for safety, pollution
were introdtced by Dr. Ray- and environment.
mond '. Satithier, forcoerChair. As ts of 5
man, Cnouncil of Economic Asser Rule o 0
Advisers, ant Professor of Eco- 'Damn Complicated'
nottics, Barnard College. Dislirecitsg 'itc another
spake viewes at i'ax Fonndita-
P lans' Eligib ility R u les speaker, 2 d Nat io ax Co n -
cOtc 's 23ed Nationtal 'lax Coni-
Too~tichnJ ference, Victor Zink, Director,
Too Strict: Rdneypoyce llent Section, Gen-
Declaring titat eligibility re- eralMotocs l'crsonel stall,
quirements its private ension characterized the oposed pen-
plans arc overly restrictive, sios vestin tile oh fifty at
Gabril Rudiey, Treastiry De just too 911'nn cu0cclsicated.
pariient nlfiial ipoinlef ont Ga lncl tudey. Tretsirv
that it is d[Ifficoht 'to caa cte Dleplartl'nt jn'ogratt patti.
lo4ic of aillyc a unfcrnc, jant tai earher exldained tie
mininmnum sestinig reqlire. 'rnle: any coctbitation of a
meat. fie indicated that tIsis worker's age and ycars of ser-
Was a1ocig other iension prob. vice totaling 50 should entitle
tel concsideratincts tow before the worker to 50 percent vest-
Treasury officials and Congress. ing its his pension.
Rodney, Assistant Director We had a lot of these illagic
in the Treascry's Office of Tax ages iii otr programs, said
Analysis, etphasized that nt ZInk, and every one of theitt
inprovcicent its vesting pro- causcs its dilfficuty. lie acdded:
cthdres is an objective ot great Whenever yot set some kind
i'portance ibecause it goes to of a irolsition which auto-
te heart of the private pension tnatichlly makes yon a special
sysle: cetiremcnct secnrity. person, the t cttmakes some.
He told attendees at Tax body else a very tntsi)cecial per-
Foundation, Ilc.'s 23rd Nation- son. You hie all it lvda at
al Tax Conference: We want age .10, fhr example, and when
.cc expanding, healhy retire- lie leaves )ou at at 19, lie has
ittent systemi as an alternative nothing. You hire act individ-
to an ever-increasing level of ual at age 50, and lie leaves
Social Security taxes atd bemie- yon at age 51 alter one Icar of
fits which depirive persons of contritticliion to you, and you
flexibility icc tsanaging tieir owe tittn a henefit, tnder oir
retirement savings witin the program, If this [tile of 501
private system itself. were in effect around $3.75.](ViewImageLocal?handle=hein.tera/taxfeaturs0016&div=1&collection=&method=preview&ext=.png&size=3)