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![handle is hein.tera/taxfeaturs0017 and id is 1 raw text is: TAX FOUNDATION'S
Special 24th National Tax Conference Issue
MONTHLY TAx FEATURES
Con lht 1973 by Tax Foundation Inc. 50 Rockefeller Plaza, New York. N. Y. 10020
January 1973
Vol. 17, Number I
IV. Alien Wallis. Tax Foundatlio Chairman, eight, congratulates
Ru hsardi C. Gertestberg. Chairman, General Mfotors Corporation, on
Air. Gc'rstnberg's receipt sfl ihe Foiindatio's Award for Distinguished
Public Scrvke at the Foudatiot's 35th annal dinner last month.
Airs Public Stake in Labor Cost
]it his address acceptitg Tax Foindation, Inc.'s atnal Award
for l)istingoished Public Service, Richard C. Gerstenberg, Chair-
matl, General Motors Corporation, said that lie felt it forttnate
there woul be tn funlamental restructiring of tlie Federal
tax systems it 1973, because the business community niist devote
its aItentios to other serious
matter, file control of hilla- most inventive, still the na.
tit bcitg sitOat psronhneit. tion's greatest resotrce-and
lie tol attendees at tlie we 'trst never forget It.
Fosndation's 5tit annal din- Frederic G. Donner, former
tirr the nation's businesses CI Chairman, made tite
itst still he concerned aboitt award presentation.
cost pressres, anod that lie was
eIspeciallv concerned about
lie oitlo;ik for labor costs. National Economic
ir. Gerstenberg said lie saw N
a sitlile inflence in the Policy Seen Needed
couintrc' tlreatening to iscrase
labor's cost even more. This Tite teed to develop a na.
lnlltence, lie said, is rooted it tional economic policy to co.
the pibli's ulcrstanding-or ordittate fiscal actions at all
lark of inderstanding-of the levels of government, was
high econoic staitts of the stressed by Robert E. Merriam
intilstrial worker today. ill att address to attetislees at
It cotcliditg, lie said: 'ax Fottdation's 21th Na.
The Atesican work force is tional Tax Conference.
still the best educated, the The titsle has passed, said
lAr. Aferrian, Chairman, Ad.
Foreign Trade Bill visory Cottission otn Inter.
governmental Relations,.
wshens eachs gov'ertntment level
Termed 'Unrealistic' ,beahovr et ee
is able to set its own fiscal
Adoption of tire roposnIls in hotse in order, regardless of
the crke-lartke bill, together its effects ois tle revente-rais.
with rliscs restrictiots, wofhl stg capabilities of oither levels.
be a classic case of killing the Recent events, lie teclared,
goose tlat haiti tile golden suggest the need for such a na.
dcclared Iticltard C. NflstcTe tional economic policy. He
it ant address to 'ax Foi I sal tis policy must be rec.
tion's 2 hi Natiotal T'ax Conl ognized as a two-way street.
ferncure. Each level must realize site
lie toted that tile tao most need to give a little if It is to
I cturi featurei of tire ro get a little.
poseil neasnre were repeal of
tire foreign tax credit ahd tax.
ation sif tndistrilted inconme Says 1973 Tax Action
of U.S. foreign ssslidiaries.
ffr. af,,sclie, Seior Vice To Have New Setting
President, Coca Cola Export
Cirporation saih the proposals, After reviewving some of the
to inn. are unrealistic. tax refors actions in 1969,
lIe pointed ott that atn Latrence N. Woodworth,
American rimpiaty making a Chief of Staff, joint Commit.
Nrfit of $100,000 before tax tee oii ItIterial Revente, Tax.
abroad (and subject to a for. otion, predicted that whatever
rign tax of $18.000) in Coirt. sort of reform was attempted
try X, derves an income of in 1973 wotld take place in a
S52,000 after taxes. different atmtosphere than did
But if the Burke.Hartke hill the former revisions.
'becaie law, fie asserted, the Speaking to attendees at
samne roncm-rn's net profit (after 'x Foninlatiot, Itc,'s 2,htb
both U.S. and foreign taxes) National Tax Conference, Afr.
wslld lie tinl $27,000. Wootorth tsanied among
Wufeanit e, lie stressed, tlie possible items on which 1973
IUS. comlpany's rivals it tie dhiscussion iight touci: the
lited Khigdom, in Canada value added tax; tax simplifi.
aind in apano wihl hie earn. catiot: the retiretent income
ittg ttet lrofit after taxes of credit; tax treatnient of anotd-
afoot $50,000, .-17,000 and ties; estate a1 gift taxation:
$52,000, respectively. capital gains at death.
Tax Fotntatlon's 241h
National Tax Conference
In New York City, Dee. 5
and 6,.hil as [Is Ihemet
The Challenge of Tax
Reform. TFs 35th an.
nual dinner was held on
Dec. 6. Thisa ITF Is based
on Conference and dtner
adtlresases. Proceedings,
containing Conference jsa.
rers anti discussion, will
te available early In 1973.
Kust Proposes
Tax Substitute
A form of tite value.added
tax (VAT) imposed on busi-
ness and an expenditure tax
on individuals could prodtuce
reventtes comparable to those
from existing income taxes,
according to Leonard E. Kutt,
New York City attorney.
Addressing the 24th National
Tax Conference sponsored bsy
Tax Foindation, Itc., Kntt, a
member of the law firm of
Cadwalader, Wickersham and
Taft, declared that the goals
of efficiency, equity and in.
cotne redistribution could be
reached bly abandoning de-
pendence on the income tax as
a revente sotrce, and ttrning
to this dal tax feattre.
We need not abandon the
goals of revenue efficiency,
eqsty and income redistribt.
lion lay abandoning the in.
come tax antI embracing tax
nettrality, lie said. We can
have all of these If we are will-
ing to abandon doctrinaire at.
tittdes of old liberalism for
a truly liberal open-minded.
ness toward new Initiatives.
Spurs to Investment
Seen 'Not Excessive'
The incentives to investment
made available b Congress,
said Alexander - Stott, Vice
President anti Comptroller,
American Telephone ant Tele.
grapb Company, have not
seen excessive.
The incentives have roghly
offset amonts by which allow.
antes for depreciation in the
nation's inutlstrial plant tnder
existing tax laws have been
inadequate to provide for
depreciation if) terms of real
valte, he told attendees at Tax
Foutdation's 24th National
Tax Conference.
If, he said, in ftture, the
istorical cost basis o[ depre-
ciation is to be retained, Con.
great should, as a minimum,
coutinte to provlde benefits
which offset in ftll the
amotts by which depreciation
allowances are inadeqtate.
Stch benefits, lie added, shotld
remain in effect even when
government is cooling the
economy.
Elaborating earlier on his
point that historical costs do
not provide for full recovery
in an inflationary economy, Mr.
Stott noted that even wthh a
modest 3 percent inflation
rate anntually, at the eol of
ten years, recovery of a $1 rill.
lion original investment ntler
the straight-lline method, will
troduce only about $853,000
in terms of tie purchasing
power of the initial Invest-
ment.
Sees U.S. Spending 'Cloud'
On 'Good Economic Horizon'
The growth of Federal 4overnment spending is a source of
real concern in what othersuve appears to be an extremely good.
looking economic horizon for the next year or 18 months at
least, Caspar Weinberger, Director, Office of Management and
Budget, told attendees at Tax Foundation, Inc.'s 2,1th National
Tax Conference. journed in October, close to
lir. Weinberger, Secretary. $260 billion its spending had
designate of ltEW, speaking beef, authorized.
at tire second day of the ses. Emphasizing the difficnhies
siott, declared lie felt this ia sraking this cut, Mir. lcin.
good-looking horizon lght berger remittded that eveni if
even last 24 months. the $250 billiotn lIit is
fie said that the Adminisra. aclieved, there would still lie
tion mst determine what ac. a full-employntett deficit it the
tivities are to be incltded in $3.5 billion range.
a $9.5-$10 billion cut that has Alluding to proposed reform
to be tiade 1it the budget to of budget procedures, lie said
bring it wilthin tie $250 bil. that lacking sich a change [we]
lion spending limitati ot ' will get to tie sittation IVwhere
planned by President Nixon. we literally don't have any
lie said these cuts must fall control over it [ilte budget]
within a small sector of abott and where we will be faced
$40 billion in the Iudget sb. with the need for taxation,
Ject to Presidential control- with more inflation, with re-
ecause wsen Contgress atl. strictive tiotictary policy
Puts Capital Gains Tax On Scale
A major improvement it the
Federal income tax that wotld assets beyonl the first period,
pot the taxation of capital Iowever, be taxed at diminish.
gains on a sliding scale, was ing rates: 80 percent on gaiit
sgted to attetdees at tte ot assets held tip to three )cars
TaxgesFottatiot, Inc.'s 24the sibject to tax; 60 percent bIe.
National Tax Conference. tween three and fire year; 40
percent from five to tetl years,
Das Tiroop Stith, Harvard aid 20 percent after ten years.
proessor emerits, anti direc- The present six.mointh rile,
tor o[ tite Cambridge Research cotpled with tle present high
Institte, said such a sale tax rates os very long-term sIt.
might provide for taxing gains vestments, gives an njtstificd
on assets field for less than a tax break to curning in tie
year or 18 months as ordinary markets and discourages If.
income. qtidity afll shifts Itt true i.-
He sggested that gains on vestment fids, he said.
Warns: Stop Spending, Avoid Tax Hike
A plea for the absoltte ne- certain the economy could als.
cesshy of Federal government sorb it sithlot seriously ad-
spenting restraint-to avoid a verse effects.
tax increase in fiscal 1g7T1-was
made by Dr. Raytiond j. Satt. Lists Five Tax Areas
nier Iefore Tax Foundation,
Inc.'s 24th National Tax Con. Congress May Review.
Terence.
Dr. Satlier, former Chair- Under Secretary of the
tan, Council of Econ'tnc All. Treasnry Edwin S. Cohen,
visers, and Professor of co- 2li Nati i Tax Fountion's
nonticas, Barnard College, tie. 2-1th t.
dared; discussed five taor areas itt
ard:Whticht Contgress is lI C t cll
Althottgh foreseeable deve, wIkel to rtI.
optients do ot justify tie con. sider tax changes it 1973.
clislon that a tax icrease is 'ley are capital gains tax.
Irlslnn tha a fx liillatfir, tie tt1i41111ti11tt tax oll
inevitable it 1971, as increase
coitd lie made inevitable by a prerette Income, the Asset
failre to exercise spending re- preciation Range System,
srttecisestin, he- Job Developmlent, Invetinett
strains. Mle
Without stch restraint, he Credit, ani tax shelter re-
added, a situation coling mainly fron accele-
,added, a Htuatin coul die. ratedderiaon
velop in which no palatable rat ciaton
policy option would be open He saII the Treasury and
to the government, and a tax IRS recently completed more
increase wottd lie indicated. than 9,000 typewritten pages
e warnetd: it is Iy no means of regulations implementing
___warned:__t __by no means the Tax Reform Act of 1969.
The clhanges helped eat nor).
Weighs Tax Increase taxable returns sith ACi ,r
Against Capital Needs 78 0o tit 300 in 16, to
The argument that income
redistribttion through govern- itveighed against tax chtlnges
tuent finance wotld - in the that woul increase govern.
long rin - produce more de- ment reventes l tbut redce the
siralile results (particularly at ability to save.
low income levels) than the Professor Harriss, economic
msch broader benefits of pri- consltant to tite Foundation,
vale capital expansion was re. said that among tte 1970's
futed bsy C. Lowell Harriss in capital tneeds is new invest.
ats address before Tax Fonda- ment of between $19 atd $32
tion's 24th National Tax Con- billion annsally to provide
ference.. productiot facilities that mean
The Columbia University jobs ufor asont 1.3 million new
professor of econonmics also workers each year.
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