The Los Angeles Times from Los Angeles, California • 12

OTIS CHANDLER, Publiihtl ROBERT D. NELSON Executive Vice President and General Manager NICK B. WILLIAMS Executive Vice President and Editor flos Anodes SKmcsi HARRISON GRAY OTIS, 1881-1917 HARRY CHANDLER, 1917-1944 CHARLES C. CHASE, Vice, President Production ROBERT LOBDELL, Vice President and General Counsel RICHARD S. ROBINSON, Vice President Administration VANCE L.

STICKELL, Vice President Sales JAMES BASSETT, Associate Editor JAMES BELLOWS, Associate Editor ANTHONY DAY, Editor of the Editorial Pages ROBERT J. DONOVAN, Associate Editor FRANK P. HAVEN, Managing Editor WILLIAM F. THOMAS, Executive Editor NORMAN CHANDLER, 1944-1960 EQUAL RIGHTS LIBERTY UNDER THE LAW II f. (, for if- i 12 Port II WEDNESDAY MORNING, JUNE 30, 1971 The Muhammad Ali Draft Case i.

Businessmen Get a Break BY D.J. R. BRUCKNER The Administration's new business tax rules called the Accelerated Depreciation Range system distort the tax system. Treasury put them into effect June 22." It. tried to in January, but protests from, members of Congress and public interest groups induced it to delay.

Now some of those protesters intend to sue in an attempt to void these new rules. ADR is really a corporate tax break, continuous and cumulative, worth $3.9 billion a year for the next decade on the average, and probably more thereafter; it is the biggest, tax break of its kind in history and was in-stituted without congressional action. Treasury announced it, but it was mostly cent cocted under direction of the White Housa Staff. At the heart of ADR is an option allowing businesses to depreciate, or write off their assets against income for tax purposes, eith er 20 faster or 20 slower than writeoffs allowed under 1962 Treasury guidelines-. Those guidelines, and a set of-standards called the reserve ratio test, were established in an attempt by government to roughly rev late depreciation to the real usable lifeMnf plant and equipment, and the actual time asset was used by business.

ADR eliminates the reserve ratio test and accelerates depreciation, which is already the great bookkeeping game these days. If a business has equipment which it uses" for 10 years, it can write off against income in eight, or in 12 years, as it chooses. Since tax is calculated and paid annually, a spread of four years in 10 can make a great difference in a corporation's cash flow. The White' House claims this gimmick will stimulate Investments and jobs, and thus the economy. Most economists say this is nonsense; irn vestment is undertaken with the prospect-of increased sales and profits, and investment is drawn as needed from capital suspects the ADR will simply increase, profits.

The tax break will grow with a boom and contract with a recession, which is an effect precisely opposite the White House's claim. Thus, corporate net income for tax purposes will always be severely understated as compared with net income for, say, a stockholders' report or any other report in which, the corporation wants to look good. Treasury rulings and legal changes in the last .20 years had already introduced gaps between real income and taxable income; the ADR system challenges the very concept of a tax on the real income of business. This thing is a loaded Christmas tree. For instance, it is retroactive to Jan.

1, applicable to any business whose fiscal year ends in 1971. Example: retail stores, from the incorporated local little to the national giant. Most end fiscal years about Jan. 31 because inventories are lowest then. So, on June 22, 1971, will give them a break on the taxes on up to 11 months' income from 1970.

I wish the IRS would give me a break like that. The Longest Count Since U.S. Troops Are Needed in Europe but Not as Many as Are There Now The Supreme Court, with the refreshing unanimity of an 8-0 decision, has cleared Muhammad Ali of draft evasion charges. His appeal for deferment on religious grounds has been accepted in yet another elaboration of basic civil rights. This in it-: self is a reassuring action at a time when some citizens are convinced that the nation has lost its head if not its principles.

The decision also corrects a concern that in the original criminal action Ali was a victim of his color, reputation and affiliations. Since 1965, the Supreme Court has repeatedly clarified and extended deferment conditions from the original and excessively narrow ruling that only committed members of pacifist religious bodies could become conscientious oojectors. unaer ine leericlati rofnvme nf Mr Nivnn. the draft In America today is the most equitable in the nation's history. This does not mean that it is perfect.

There can be no satisraction ior tne young man who opposes the war in Vietnam but is not opposed to all wars. The Supreme Court, by an 8-1 margin last March, said that "conscientious scruples relating to war and military service must amount Deliberations on the The U.S. Supreme Court has agreed to hear four cases next fall that challenge the constitutionality of the death penalty. On the court's decisions could depend the fates of 669 persons currently awaiting execution after conviction for capital crimes, including 99 on California's death The court has said it will be concerned with one question only, whether the imposition and carrying out of the death penalty in a particular case violates the Eighth Amendment to the Constitution, which prohibits cruel and unusual punishment. Forty states now impose the death penalty, though there is no clear standard of consistency in either the crimes or circumstances for which the penalty is applied.

Arguments both for and against capital punishment are familiar after years of public discussion of the subject, and the court is not likely to hear much that is novel. Those who would retain the death penalty contend that it is fit punishment for many crimes, that it deters others from committing crimes, that it is a necessary protection for society. Opponents of the penalty dispute its deterrent influence, argue that it is morally wrong for the state deliberately to take human life, and note that a key purpose of incarceration is supposed to be to provide an opportunity for reform and redemption, something denied by the finality of execution. As we say, old and familiar arguments, for the most part philosophical or emotional (the dividing line can be vague), neither self-evident in terms of proof nor readily verifiable. The court's task is to find a path through these arguments to the meaning of the law, to determine by what values that meaning is measured, and then whether the law is being denied or pervert ed in certain cases.

In a sense, this is what the court must do all the time, but in the to BY ROBERT MUNICH The argument is plausible: "If, after 5, 10; or 15 years of American help, 18 million backward South Vietnamese cannot defend themselves, they'll never be able to do so. Let's get out!" The argument is also specious. It ignores the. varying magnitudes, conditions and purposes of American assistance at different times, as well as the changing threat, and American national interests. I shall, hypothetically at first, put forward an analogous argument, at least as plausible and less specious: "If, after 25 years of American assistance, 325 million advanced Europeans cannot unite to defend themselves, they will never be able to do so.

Let's get out before we go broke providing the basis of their defense and subsidizing competition which hurts us badly!" Champions of the present American commitment to the North Atlantic Treaty Organization consistently contend its effective military power would vanish if a significant proportion of some 300,000 American troops were withdrawn. It is, therefore, reasonable and fair to meet them on their own ground. Although the argument is as persuasive if as emotional as that regarding Vietnam, I would not advocate total withdrawal of American forces from Europe. Although Europeans are much better situated to defend themselves than Vietnamese and attack is unlikely, Europe is also much more important to us. I would, however, suggest major modifications of the U.S.

commitment including substantial cutbacks in our troop strength. The chief purpose of the American military presence in Europe is its psychological effect on our friends and our enemies. No responsible military man believes 413 American divisions could halt a Soviet thrust into Western Europe. But American units serve as a nucleus around which European units coalesce. They also enhance stability and give Europeans confidence in their security by discouraging subversion and showing that an attack on Europe would be an attack against American forces.

Although American troops are the most effective fighting units of a force which is not particularly effective, their chief function is political. They are the "hostage army," which concretely proves the American commitment to both Western Europeans and Moscow. Because of their presence, major attacks against Western Europe would, almost assuredly, force an American nuclear response. The same effects could be attained by a greatly reduced, streamlined American military presence in Western Europe. Moreover, a smaller American force, costing substantially less, might just possibly stimulate greater European participation in its own defense.

The often reviled Americans have conscientious opposition to participating personally in any war and all war." No government can concede the choice of wars to the individual. It would be a mistake to let the controversy over Vietnam obliterate the military responsibility for the United States in other parts of the world, however. Congress has recognized this in agreeing to a two-year extension of the draft in legislation now being sorted out of the House and Senate versions. The majority of the men in uniform are professionals. The trend toward an even higher proportion of career men is dramatized by the Defense Department decision to reduce draft calls this year to about 142,000, the lowest level since 1964.

But there will always be a need for the conscript to preserve in the Army that quality of the citizen army that gives essential leaven to the organization. Muhammad Ali may find the justice tardy compensation for the three years of athletic activity that were denied him by the World Boxing Assn. The decision may not restore his faith in the American system. But it will reassure many. Death Penalty Eighth Amendment cases there is this difference: for hundreds of persons now and in the future, it is literally a matter of life or death.

The court will rule on the meaning and application of the law, but plainly there are other considerations as well. Constitutionally sanctioned or not, the death penalty to our mind is an anachronism which retards our aspirations to humaneness and lessens the dignity of our society. Horrible crimes are committed and must be punished, but we question strongly whether our social order is in fact improved or made any more secure by providing for legal executions. The time has come, we believe, for California to seriously consider abolishing the death penalty, contingent on devising a system of life imprisonment which would assure that those who are a threat to the community could not go free. Unequivocal Maybe We sneered about them, inwardly; open sneering betrays a lack of grace that we would never admit, but an inward, sneer, yes, when the public opinion polls disclose that inevitable clump of opinionless people.

We came across them again yesterday in glancing at a poll which reported that 489 of the pollees came down hard on one end of a question, 33 on the other, and 19 "had no opinion." Who are they, we wondered, a slight inward sneer beginning to form, these people who "decline to answer," "have no opinion." "don't In a flash of tiny insight, we knew. As long as the "have no opinion" peqple are out there, holding together their silent ranks, this nation will never become totally polarized. State Controller Houston I. Fluornoy, chairman of the lands commission, insists that the moratorium imposed after the massive oil spill in the Santa Barbara Channel is still in effect and remains the commission policy "except where there are adequate safety measures." The commission believes such measures exist on the island off the Orange County coastline. But we have reservations that fail-safe drilling exists to the extent the commission seems to feel that it does.

The policy of a well here and another there can be dangerous. And our shoreline is too precious a natural asset to imperil, especially when oil is available at other locations. We believe all offshore oil drilling should be phased out as soon as possible and new drilling banned until it is absolutely foolproof. The royalties the state may gain from further offshore drilling cannot cover the environmental price we would have to pay from an oil pollution disaster. the Dempsey-Tunney Fight S.

ELEGANT too long carried a great psychological and financial burden to help Europeans recognize their own self-interest. Hard facts on present dispositions suggest the most advantageous and least damaging way to cut back. The American ground combat force is 4 13 divisions 65,000 men at wartime strength. Those divisions are not at full strength; the remaining Americans are support troops. The Sixth Fleet in the Mediterranean maintains a "shore party" of only a few thousand.

Its permanent complement is just three ships. Other units rotate every six months from the United States and are supplied from the United States. Except for a few nuclear submarines, the U.S. Atlantic fleet is also based on the East Coast. The Air Force, similarly, maintains few combat air bases and rotates combat units.

Ground forces are, therefore, the kernel of the matter. More than 200,000 troops support a striking force of no more than 60,000 and maintain "ready" facilities for the reinforcements which would, presumably, be flown to Europe to meet attack. There would be little time. NATO could hold for two weeks at most. The same psychological and military effects now sustained by nearly 300,000 men could be attained by 100,000 American troops.

That figure, some professionals feel, is generous even lavish. They advocate no more than 70,000. The combat force would not be diminished. But suprx-i units would be cut severely, since, by and large, they perform no immediate, essential functions. The cutback should be accompanied by other measures that would reduce both costs and the irritations arising from the presence of many foreign troops and their dependents.

Except for senior officers and specialists, who would serve longer tours, duty in Europe could be reduced to 13 months. Short-tour soldiers would not bring their families. A vast support apparatus could be sharply trimmed: schools, post exchanges, department stores, commissaries, "community activities," and medical facilities as well as the major regular air-lift and extensive recreational facilities. Still the combat force would remain. Ready facilities for reinforcements would be maintained, but the reinforcements would bring their own direct support units.

Support units would be brought in to any crisis protracted enough for reinforcement. Some senior officers would agree, though many would automatically object to troop reduction. Nevertheless, the program is worth consideration by a cost-conscious America which now realizes its large troop commitment bestows neither particular advantage nor significant influence in Europe. Ciftrf lf71 lm Tf But that does not cost Treasury much, re latively; maybe a few hundred However, Treasury has also redefined the so-called first-year convention. A big business installs equipment all the time.

The old convention held that all equipment installed in any fiscal year could be written off at the going depreciation rate against six months' income; in a word, it was a definition of a median. The new rules allow writeoffs of equipment bought in any year against nine months' income. This has to cost Treasury about $1 billion, or more, a year. Treasury's statement on ADR talked at length about the difficulties of administering reserve ratio tests and old guidelines: it amounts, in fact, to a confession of administrative breakdown. So, under the new rules, there will be an Office of Industrial Economics, to determine from tax returns and studies how guidelines, repair allow ances and other tax-determining criteria can be updated.

These fellows just have to be kidding. Business has been startlingly successful ever since 1954 in tax. breaks from a large, stubborn, conspicuous Congress. You can just imagine what kind' of influence it will be able to bring on a unprotected, bureaucratic OIE which has the power to recommend rule changes, changes which mean tax savings increased cash flow. Thomas F.

Field, director of the public interest lobby Taxation With Representation, raises some philosophical questions about all this: "We seem to have moved far from the basic concept of tax on income," he says. "Are income taxes really fair any more? Whatever happened to the idea of income tax as envisioned by the liberal reformers of the early 20th century, the idea of the fairest, most equitable, efficient tax? Should not Congress consider present tax laws rules in the light of that question? Or should it consider moving to an entirely different type of taxation?" Disturbing question.lln rome tax still appears to be the fairest. Well, the idea looks that way. The practice looks otherwise more and more, for some privileged and influential people. Dtily Founded Dee.

4, 1M1 USINESS AND EDITORIAL OFFICES Timts Mirror Squir. Ln AngtlM, cillfomii W051 Fhont t-2J5 Clusifitd AdvtrtiUm 42M4U Ditpiay Advertising 2f tU ORANGE COUNTY OFFICES Ctero. Cotlur, Manaoinv Editor H73 Sunflower Costa Mesa Phone W-J1SI DOMESTIC BUREAUS Washington (1700 Pennsvlvanle N.W.), David Kreslewi bureau chief; Leo Adde, news editor; Rudv Abrarmon. John H. Averlll, Robert S.

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Box fmu Stanley Meisler. Beirut (Press Coooeratlve Rue Memr), William Tuohv. Jerusalem (II Ben Labrat Rehavla), Tom -Lambert United Nations (Secretariat United Nations Bad Trend in Offshore Drillim When the state lifted its two-year freeze on drilling new offshore oil wells last January we were concerned, along with many others, that a more permissive state policy would follow. It seems our fears were not unfounded. The State Lands Commission last week granted Standard Oil Co.

permission to sink another well on its man-made island two miles off the Seal Beach shoreline. The new well will be the 74th on the island. It makes little sense to quibble over whether this one will be any more dangerous than the other 73 that have, so far, caused no problem. What is disturbing is the state trend toward more The new drilling was opposed by representatives from the County of Orange and the City of Seal Beach. And pending in Washington, D.C., is legislation to ban offshore oil drilling in federally controlled waters from the Santa Ana River to the Mexican border.

Thus, it seems only logical that the state should be trying to discourage new shore drilling, not authorizing it. ''It's Detroit They're recalling those cars for defects.".