The Boston Globe from Boston, Massachusetts • 11

The Boston Globe Tuesday, August 8, 1978 11 01 -rr E(M1MIW 03 I i Jcl from -T8ii The 'ECU' and its potential impact on America's future 1 iTI 3 M(S n-i -'A'- Jg value directly against the dollar; the member currencies would float within a much more narrow band. In other words, they would be more stable. Q. Is the European Currency Unit a good or a bad thing? A. It depends on your point of view.

If you're a European, it could be a way of protecting your economy from the disruptions caused by the decline in the dollar, especially those that make your exports to the United States more expensive, and imports from the US cheaper. If you're an American, it's not so simple. On the one hand, you don't like to see your dollar go down; it means you get funny looks abroad when you try to change your money. But on the other hand, the more the dollar drops, the cheaper and easier it is to sell US exports, and the more expensive imports become, and that helps your economy. So, if the Europeans come up with a way that gives them some protection from the dollar's decline, America won't find it so easy to export its troubles in the form of cheap dollars, and will'have to deal with what its officials like to call "fundamentals" its high inflation rate, and that hugh trade deficit caused largely by the gigantic bills it keeps paying for oil imports.

Q. What's the timetable for this? A. So far, all that's been agreed on is the idea in principle. The finance ministers of the nine countries are now supposed to work out details by the end of October, and there is hope that the heads of government, at a meeting scheduled for December, could send the plan into operation next year. As for the long-term goal of one form of paper money and coins for the Common Market, it's very hard to tell, but most people assume it will take at least five years.

Q. Whose brainchild is all this? A. Mostly the Germans and the French. With their low inflation rates and strong currency, the Germans have really been stung by the dollar's decline. And the French are motivated by two concerns: lowering their own inflation rate and building Europe into a more powerful and independent eco A.

For a generation, is has supported every step towards unity, on the theory that a more prosperous and strong Europe means a bigger market for everybody. But Washington can't afford to be so generous anymore. Europeans feel that the United States is not doing much of anything about inflation; and above all still hasn't got anything to stop bidding up the price of world oil and running those crazy trade deficits. To solve these problems Europeans feel the United States must eventually take some tough, perhaps unpopular, measures. It's easy to see why the Carter Administration would rather cheat a little and let the dollar's drop in value bail it out for a while.

But what the United States must understand is that Europeans don't think that's fair. Q. If there were some day a single Common Market currency, what would that mean to the average American? A. It would mean that when he or she comes over to visit, there wouldn't be all that time to wait in line to change money every time a border was crossed. It could also mean a decrease in speculation against the dollar.

nomic and political entity on the world scene. And everybody else is motivated by an overriding concern: Less currency instability means more investment by now skittish businessmen and that means more noninf lationary growth for Europe and less unemployment. Q. What about the other European countries? A. The only real problems involve Britain and Italy, which have comparatively weaker economies and, therefore, comparatively weaker currencies.

They are a little afraid of too close a link to stronger currencies like the German mark because that might force them into measures that would slow their recovery from the recent recession. What they would really like is to be able to have their currencies fluctuate within a broader range until their economies have recovered more fully. But those are problems that officials expect will be worked out in negotiations this summer and fall. Q. Why is the United States so hesitant about supporting this important step toward a united Europe? Ey Thomas Oliphant Clobe Staff i PARIS A long time ago, when the tiree Musketeers were riding around Irance saving distressed ladies and slicing up villains, they would stop at a tavern for a little wine, and pay their bill with a coin called "ecu." Like a lot of things associated with tie monarchy, the old coin was done away with after the French Revolution, and hasn't been on the streets here in rearly 200 years.

This time, as an acronym, the word, which stands for "European Currency Unit," is being heard again across Europe, and in financial and political centers in the United States. Behind it are some very fancy, technical concepts, but some day this device could evolve into a single currency for the nine countries of the Common Market: Britain, France, West Germany, Italy, Ireland, Denmark, Belgium, Holland, and Luxembourg. And, depending on how it works, as well as if it works, could hinge a great deal of America's future economic prospects. Here is an attempt to answer some of the questions that arise over the ecu concept and the way it would be put into practice: Q. What is this European Currency Unit anyway? A.

It should lje stressed that it is only a very tentative plan that could still fall apart; until now, the Common Market countries have even had trouble agreeing standards for selling duck eggs. But at first the unit would function as a reserve fund for existing currency, for use in the foreign exchange market. Q. How would it work? A. The countries would chip in something like 20 percent of their reserves of dollars and gold to create a pool that could be as large as $50 billion.

In return, they would get currency units they could use to draw out dollars or other funds as needed to beef up their own money's value in times of financial unrest. In practice, the European Currency Unit would fluctuate in )ri I "IE Hams cancels talk on interest policy leases 60 cars '-Ov -v. it i 3 In 7- vv.v iff i II "3 IT if Directors of the MBTA yesterday approved a $2.4 million contract with the Toronto Area Transit Operating Authority to lease 60 coaches for the system's commuter rail service. The two-year contract provides $1,971,000 for cars, which seat between 90 and 92 people, and $398,000 to pay for voltage conversion, transportation to 1,4 JLa- dential aides, to clear their television appearances in advance. That new move is designed to end public squabbling among top administration officials.

Powell said, however, that the White House always had required Cabinet officers to clear their congressional testimony, in advance and that in doing so, President Jimmy Carter was merely continuing a policy followed in previous Administrations. He said this should not be taken as evidence that the White House has further tightened its grip on public statements by Administration officials. The only remaining witness at the hearing was Federal Home Loan Bank Board Chairman Robert H. McKinney, who said the Fed's restrictive monetary policy "imposes a heavy burden on the important housing sector while attempting to stabilize the entire economy." He said if interest rates rise much higher, a severe credit crunch could result, seriously impairing the housing market and causing more Associated Press WASHINGTON The White House refused to clear testimony HUD Secretary Patricia Harris planned to give to Congress yesterday concerning the Federal Reserve Board's interest policy. She cancelled her appearance before the House Banking Committee rather than change the testimony, committee aides said.

Rep. Henry S. Reuss (D-Wis.) committee chairman, said it was the first time he could recall a Cabinet member cancelling congressional testimony after disagreement with the White House over its content. At the White House, however, presidential press secretary Jody Powell said it was his impression that such things happened "all the time." The Harris incident comes two weeks after the White House told presidential aide Midge Costanza to cancel a long-scheduled television appearance. Costanza resigned less than a week after that.

The White House also is requiring Cabinet officers, as well as top presi 'o-A Boston, temporary import bond and insurance. The cars were built between 1947 and 1974, according to the MBTA, and are "of modern design and in excellent operating condition." 9 It I if i 3 The lease is scheduled to run out about the time the MBTA plans to take possession of 60 new coaches and 35 4 new locomotives as part of the $95 mil-lion federally-aided Commuter Rail Im- provement Program. The MBTA directors also voted in the weekly meeting to: Approve a "cooperative agree- ment" with the Boston Redevelopment Hi Authority to build new kiosks for the Green Line's Symphony Station at a cost to the MBTA of $91,750. "Wei wwar Wall Street takes note of a snapshot binge 4. "A 1 graphic history with the success of its low-priced One-Step SX-70 camera (which often sells at a heavy discount from its $39.95 list price).

"We have sold more Polaroid camer as in the first six months of this year ANOTHER BATCH Carousel of integrated-circuit jects wafers to specified amounts of atomic penetration, wafers is lowered into ion implantation chamber at RCA's Each wafer contains about 250 tiny electronic squares Solid State Division plant in Somerville, N.J. Chamber sub- which, when separated, form "heart" of computer systems. Authorize the Boston Maine Railroad, which operates the commuter rail service, to establish zone fares of 5 less than 50 percent of regular fares for (i students through high school age. Lease an additional 14,021 square feet of space in the authority's present headquarters at 50 High st. for an al rental of $106,279.18.

Authorize purchase of $642,429 worth of parts from Westinghouse Elec- trie Corp. and Ohio Brass Co. to mod- than in the first half of any year in our history," said William McCune, Polaroid president. McCune recently re Corporations and tax savings Chicago Tribune Americans have gone on a snapshot-taking binge and Wall Street hasn't failed to notice. Shares of both Eastman Kodak Co.

and Polaroid Corp. recently have been star performers as analysts race each ether to make favorable reports on the two issues and upgrade earnings estimates. Some analysts say the depressed state of Kodak shares earlier this year put a damper on the Dow Jones industrial average, of which Kodak is a part. Recent strength in Kodak has helped push the Dow ahead, they said. Larry Wachtel, of Bache Halsey Stuart Shields, disputes such a direct linkage but says better performance by Kodak has certainly given the market a psychological lift.

Behind the surge in Kodak and Polaroid shares are higher camera and film sales, resulting in higher profits and dividends. Polaroid has been making photo- ermze the authority fleet of Blue- I 1 birds" which travel the Red Line from Harvard to Ashmont. FAMILY MONEY tax benefits these programs will only provide tax savings where extra dollars are present. For example, with certain ported a 28 percent jump in second quarter profits. Kodak also has been selling large quantities of its instant cameras (four million or more this year, according to some guesses) as it benefits from strong marketing, a good consumer image, and low pricing.

Kodak instant cameras came on the market in 1976 and Standard Poor's Corp. says "the marketing war between the two photographic giants has served to accelerate the market." Camera sales are only part of the story. It's the more profitable film-sales outlook that gets some observers really excited. Noise experiment planned at Logan United Press International By Alexander A. Bove Jr.

Special to The Globe (Second of two articles) The prestige and officiality of doing business in the corporate form has attracted many businesses, large and small. But the attraction can go beyond prestige and officiality. It can extend to hundreds and often thousands of dollars in tax savings. 1 Under the right circumstances, doing business as a corporation can enable an individual to save tax dollars he would be unable to save in other business forms. For example, a corporation may adopt a "qualified" retirement program State to pay costs of shellfish plant rule applies to life insurance for individuals, while a corporation may deduct the cost of up to $50,000 of group term life insurance for each employee, and the benefits (neither the premiums nor the proceeds) will be taxed to the individual employee or his named beneficiaries.

In addition to insurance benefits, on the death of an employee the corporation may vote to pay a tax-free death benefit of up to $5000 to a beneficiary of the employee. No such break is allowed to the unincorporated business. Another very useful corporate tax benefit that for some reason is often overlooked is the "medical reimbursement plan." Under this arrangement a corporation may adopt by a corporate vote (and an actual plan) a program to reimburse on a tax-free basis certain employees (unlike a retirement plan, not everyone need be covered) for all out-of-pocket medical expenses of an employee, his spouse and children not paid for by health or medical insurance. This can provide some meaningful tax savings where, for example, expensive dental work is done, or some extended form of counseling is required. exceptions a business that is just squeeking by and shows little or no profits probably would be unable to take advantage of the usual corporate tax deductions since everyone of these requires an outlay of cash.

And, although the tax benefits can be great, there are certain corresponding costs associated with doing business as a corporation which should not be overlooked. For instance, there will be increased unemployment and Social Security taxes on the salary of the owner, there are annual fees due to the State of Massachusetts (and most other states of incorporation), and some states have a minimum annual "tax" ($228 in Massachusetts) regardless of whether the corporation has any profits. Also, there will be additional legal and accounting fees for the added records and reports required of the corporation. Although all of these costs must be weighed against the potential tax savings and other advantages of incorporating, it often (but not always) works out that the corporate structure can prove to be an advantageous way of doing business. Alexander A.

Bove a Boston Lawyer, will answer your tax and money questions in this weekly column. Write to: The Family Money Editor, The Boston jlobe, Boston, Mass. 02107. Federal officials said yesterday a 30-iS day experiment has been authorized aimed at limiting airplane noise in areas in Logan International Airport's flight pattern. 11 The experiment, to begin tomorrow, calls for use of new takeoff patterns to direct departing aircraft first toward the ocean, then back to land after they.al reached altitudes of at least 4500 feetUm said Robert E.

Whittington, the Federal Aviation Administration's regional. director. ion The new takeoff paths will addf three to four minutes or 15 to 20, miles to flying times, Whittington L.g told a Statehouse news conference wit u. Gov. Michael S.

Dukakis. 'lOll The patterns, which avoid nearly all overland flying until the planes have gained altitude, were tested on a limit-' jed basis during off hours late last month, he said. During the SO-day1 experiment, the new patterns will.be tested between 11 p.m. and 7 a.m. and in could expanded gradually, he addei vf for its employees (even though it may only have one employee the owner).

The word 'qualified' means it meets the qualifications of the IRS, and once this is done, contributions to the plan become deductible to the corporation. The major distinction between the corporate retirement plan and the individual Keogh plan or IRA account, is the amount that may be contributed on a tax-deductible basis. IRAs are limited to $1500 and Keoghs to $7500 per year, while contributions under corporate plans may exceed $28,000 (and in some cases much more) per year for a single employee. Another tax advantage is that a corporation may pay for (and deduct) disability insurance premiums for employ-; ees. Payment of such premiums by an unincorporated individual are not deductible by the individual.

The same rine Fisheries Division explained yesterday. "It was costing the towns money to let people dig for clams, in other words." Last week, Gov. Michael Dukakis signed legislation through which the Commonwealth assumed the $80,000 annual operating cost of the purification plant. "It makes better sense for the state to bear the cost," said the Marine Fisheries spokesman. He added, however, that shellfish harvesters will continue to pay the $1.50 purification fee.

The new law means an annual savings of $16,700 for Quincy, $3800 for Hingham and Weymouth, $2000 for Gloucester and $1750 for Bos n. I The Commonwealth of Massachusetts has assumed the total cost of operating the state-run shellfish purification plant at Newburyport, saving 10 seaside communities more than $30,000 a year. The 48-year-old facility is used to -purify moderately contaminated soft shell clams harvested in sewage-polluted waters in Boston harbor and off the North and South Shores. Shellfish diggers pay $1.50 for each half a bushel of clams purged of colif orm bacteria. The fee paid by diggers never covered the cost of operating the plant, so the deficit was passed along to com- munities which issue permits to diggers," a spokesman for the state Ma The tax benefits mentioned will generate tax deductions for the corporation, so that corporate profits are "sheltered" from tax.

However, it should also be that like most.