The Los Angeles Times from Los Angeles, California • 33

Ecie Ant lam 81imee Wednesday March 16 1983Part 11 The Bankers' Campaign of Distortion Push to Kill Tax Withholding on Interest Dividends Is Unfair "I'm from Missouri He's from Dioxin" 1 I I Sh 0 1 r'fr' die? atdir Avr -6" ikr f- 44'Oil 41 'd-i iefilgir 4'r o' 2 1 -i 4 t0 41 tv Alla itt4o I ff 04 Aloly 112 44 miiiii 4 t1 ilA 1 Jr MO1 VI re 41 -vim it 1 p'- i I '11Alk4: -st 'tt If 1 k14- 4 k' '7 1117' '44111 441011 jliA 1 II1 (141 I OIVIliZtlr A -N 1- 4 Ye 1li1411 1 rot--11- 0 alr4 Lfr i 4 i'4'4' -1 Pit 411 A' i p' -1-(ii446' ii tliti I 1 Unit Oil li A i A 1 1 BIL 4 i 1 A 1' I 14 't i 1 1 I 1 0 1 4 kit IA 4 4 isdki: 1 -c (OA 6 Po411420 Nome (Dt4 tabotfCOV6166 IA03 "I'm from Missouri Ile's from Dioxin" By ROBERT I DOLE Some people have concluded that billions of dollars in tax reform just aren't worth the effort and the risk of standing up to the American Bankers Assn and its million-dollar media campaign to repeal the tax withholding on interest and dividends But it worth the effort if you believe in sharing the tax burden fairly if you believe in keeping the taxes of honest people as low as possible and if you believe in resisting a special-interest group that's throwing its weight around Washington against the interests of us all The truth about President Reagan's tax-reform plan unfortunately it can't be found in the intimidating ads that you may have seen) is that interest withholding is not a new tax but a simple tax-collection mechanism that will dramatically improve tax compliance just as wage withholding has done for the last 40 years By collecting taxes automatically the government will recover about $1 billion each year without raising anyone's taxes According to the Internal Revenue Service 19 million Americans fail to fully report their interest and dividend income each year This "reporting gap" puts an unfair burden on conscientious taxpayers In my view it is wrong to consider raising anyone's taxes until we make certain that individuals and businesses pay what they owe under existing law That's what the interest-withholding plan aims to accomplish But the American Bankers Assn and other powerful groups have launched a misleading million-dollar advertising campaign to gut the President's withholding plan which was enacted into law last summer) and they may succeed If they do a dangerous precedent will have been set: A powerful special-interest group will have overturned legislation not on the basis of a legitimate dispute concerning its merits but by abusing the group's position of trust to frighten and ultimately to deceive the public Here is a quick list of the facts about withholding: is not a "new tax" shown that the taxes paid by the 20 largest commercial banks in the United States represented only 23 of their income in 1981 This may be why some financial institutions don't mind if your tax rates are increased to make up for tax cheaters Apparently they can manage to avoid taxes whatever tax rates Congress sets Despite the claims made in the bankers' advertisements the gap between what is owed and what is collected on interest and dividends is unacceptably wide Withholding is simply the most cost-effective and convenient way to close that gap The banks insist that the Internal Revenue Service should "follow up" on tax discrepancies instead Such a procedure could require an annual IRS audit of one out of every five taxpayers Obviously such audits would not be cost-effective especially where small amounts of interest and dividends are involved The invasion of privacy and the inconvenience resulting from a tenfold increase in IRS audits would truly penalize honest taxpayers who conscientiously pay their fair share The anti-tax-reform drive is moving at breakneck speed to kill the President's withholding plan Yet the law does not go into effect until July 1 and most banks have already spent the money needed to gear up for compliance That gives Congress and the people a few more months to address the issue sensibly Nevertheless the bankers' lobby insists on repealing the plan this month Why the rush? It's simple The special interests favor a quick vote before the people can hear the other side of the story The bankers' campaign of distortion has had its intended effect in panicking their customers But important legislation should not be judged in an atmosphere of orchestrated hysteria nor should Congress defer to an inflammatory campaign of deception If withholding is repealed on the basis of hit-and-run advertising then tax reform is a dead issue on Capitol Hill Robert Dole (R-Kan) is the chairman of the Senate Finance Committee law exempts almost all elderly and low-income Americans costs to financial institutions in implementing withholding have been greatly exaggerated Withholding will have almost no effect on interest earnings Exemptions involve no red tape you plan to evade taxes you have nothing to worry about Don't let the bankers tell you that their repeal campaign is not really a "bankers' issue" Unfortunately they insist on trying to attach it to legislation dealing with real peoples' issues struggling to get enacted on Capitol Hill Already the anti-tax-reform forces have slowed the progress of a Senate jobs bill by offering an amendment to repeal withholding Instead of acting quickly to extend unemployment benefits and to provide new employment for an estimated 300000 Americans the Senate has been forced to deal with the parochial interests of the American Bankers Assn a lobby group that resents being asked to help improve tax compliance (By the way since wage withholding began in 1943 all employers have shouldered a responsibility that is similar to the one that the bankers are trying so strenuously to avoid) Even if the jobs bill can be enacted expeditiously other "must" legislation awaiting action including the Social Security rescue package could be held up by the bankers' obstructionism Don't be lulled into thinking that the opponents of withholding have the savers' best interests at heart They would have you think so but some financial institutions apparently are operating with a double standard Many of these same organizations aggressively lobbied to maintain a $2500 minimum deposit on the new insured money-market accounts thereby locking out countless small 'savers from greater returns on their investments There has also been industry resistance to the deregulation of passbook savings position that could be costing consumers real money So much for the concern of some of these bankers for the little guy Another point: Recent studies have A Cheap Way to Save Lives of Thousands of Children Why Taxes for Graduate Business Schools? By DAVIDSON GWATKIN Every day nearly 150 American infants and children under age 5 die This is a very large number for the United States By some standards though 150 deaths per day is minuscule In the developing world nearly 40000 infants and children die every day Most of these deaths occur in an ordinary almost banal way Malnourished children get diarrhea without medicine they die from dehydration Poorly clothed and housed children regularly get drenched during the rainy season They catch cold The colds get worse pneumonia develops and death follows Or weakened by malaria they catch measles Simple ordinary measles A trivial ailment in th9 United States it is often a killer in the tropics Can anything be done Certainly the disparity in infant-mortality rates cannot be eliminated by the wave of some magic wand If the Third World is to bring health conditions closer to those of the West long-term development will be needed to raise family income and thus foster a healthier standard of living But some relatively unpublicized experimentation with new simple medical technologies has shown that a great deal can be accomplished right away In a dozen or so field experiments in different parts of the Third World infant- and child-mortality rates have been reduced by up to one-half or more within five years at modest cost The United Nations Children's Fund UNICEF has combined several of these approaches into a program that could be undertaken in the Third World: Oral- rehydration therapy a fancy term for a technique developed in Bangladesh whereby children suffering from diarrhea are given an inexpensive easily prepared liquid to counter dehydration Widespread use of home child-growth charts to make mothers more knowledgeable and participatory contributors to improvements in the health of their children child immunization made possible by scientific advances vaccines that need less refrigeration for example) and by community organizations and paraprofessionals that are increasingly able to deliver health services in the Third World The UNICEF proposal includes an emphasis on food supplements for pregnant women and young children in special need and on family planning This is particularly important because of the common fear that saving infant lives only produces faster population growth Emphasis also is given to breast-feeding which apart from nutritional importance tends to provide natural physiological protection against pregnancy The success of such a strategy will depend primarily on the developing countries themselves But supporting donations from wealthier countries will be necessary UNICEF estimates that the cost of implementing the basic program would be $2 billion annually or 60 cents per capita in the Third World The US government's response is likely to be one of disdain if recent events are any indication The Reagan Administration has proposed to Congress that the US contribution to UNICEF be reduced from the present $425 million to $27 million next year It has also recommended that the money for health in the United States' bilateral aid program be reduced 25 It's ironic A government that advocates bootstrap self-help turns away just when the international community comes up with a simple workable strategy by which developing countries can reduce child mortality This leaves the impression that the United States doesn't care about the children of the Third World Is this the message that the American people want to send? Davidson Gwatkin is a senior fellow at the Overseas Development Council and the chairman of the National Council for International Health in Washington to pay the bill but they would have the benefit of a school in the Los Angeles area that is the equal of Harvard or Stanford To an extent the same arguments apply to the law and medical schools Of course in the case of a medical school the situation is more complicated: It takes much longer to train a doctor than an MBA and medical education requires extensive laboratory and hospital facilities And it can be argued that training physicians is a vital state function in the public interest Nonetheless it is reasonable to ask future doctors and will be among the state's elite pay a greater share of the cost of their education However in the case of management education the issue is clear It takes only two years to receive an MBA Since graduates immediately begin earning more than most Californians the taxpayers should not be required to pay the bills Furthermore instituting full tuition would help the University of California business schools grow in stature and prestige thereby attracting the best students and scholars to California With the state budget deficit running at record levels the governor the Legislature and the board of regents should take immediate steps to begin charging tuition at the University of California business schools By BRADFORD CORNELL As a professor of finance at UCLA's graduate school of management I have never understood why taxpayers must pay my salary Though there may be excellent reasons for subsidizing undergraduate education it is hard to see how they apply to graduate education in business The most obvious reason for subsidizing a school is to give students a chance to get an education that they could not otherwise afford In the case of the graduate school of management most of our students come from middle- and upper-income families It makes little sense to force Californians to pay for the education of holders of masters' degrees in business administration whose on rank in the state's top 20 in their first year out of school For students who truly need the money to continue their education be repaid out of future easily be made available But giving outright grants to the rich and future rich is hardly equitable Another reason for providing a subsidy is to improve the quality of the state's business schools Unfortunately the funds provided are not sufficient to produce a school that is the equal of the nation's top private institutions As a general rule the salaries at the graduate school of management are 10 to 25 below those at the leading private institutions The classrooms offices and equipment are also inferior Consequently it is difficult for the school to attract and retain top scholars Without further funding which the state clearly cannot afford to provide) the University of California business schools will not improve in the years to come and may well decline Along with state money comes a bureaucracy that destroys incentive Currently there are 14 grades of professor here If the school wants to give an outstanding professor a raise the decision must be acted on by at least three committees and supported by a host of memos This process usually takes more than three months By then the professor may well have received more attractive offers elsewhere Major appointments are even more difficult to make Recently it took 16 months to process offers tendered to several of the country's leading economists The current operating budget of the graduate school of management is million Of that approximately $55 million come from the taxpayers with gifts and fees accounting for the remainder If a tuition equal to Stanford's were charged the MBA program alone would generate revenues in excess of 67 million By making use of those funds (in conjunction with private grants) this could become one of the country's premier business schools by the end of the still have money left to return to the university Thus instead of costing the taxpayers $55 million the graduate school of management would be a net provider of funds to the university Of course the MBA students and the corporations that hire them would have Bradford Cornell is an associate professor of finance and vice chairman of the graduate school of management at UCLA How the Building of Lever House Changed My Life House which if approved will prohibit its demolition forever In its resolution the commission said "Lever's steel and glass building was among the first as well as the most famous corporate expressions of the Modern International Style in postwar America" Architects and architecture critics very seldom agree on anything However Lever House is proving to be the exception: Almost all appear to be opposed to its demolition Lewis Mumford said recently that "Lever House is the first office building in which modern materials modern construction modern functions have been combined with a modern plan" And Philip Johnson has said "It has to be preserved Mies van der Rohe and I could not have built the Seagram Building without Lever House" In a recent article in Time Wolf Von Eckardt opposed the demolition of Lever House by saying in part) "Much as Grand Central was early in the century Lever House was at mid-century the proud proclamation of a new era Completed in 1952 it spread with wildfire speed all over the world" For me Lever House turned out to be a great blessing I had so much fun excitement and fulfillment in working with the architects that I on the adage that "life begins at return to my first love architecture Three years later Sir Geoffrey Heyworth the chairman of Unilever Ltd wrote to me: "Chuck the directors have just finished looking over the countless volumes of clippings from around the world on Lever House and have asked me to write and thank you for being so damned stubborn!" By CHARLES LUCKMAN When I was 9 I had a newsstand outside the Muehlebach Hotel in Kansas City A lady customer told me that the beautiful oak-paneled lobby ablaze with crystal chandeliers was done "by an architect" Then and there I determined to be one Twelve years later in the no-building Depression of 1931 I graduated from the architectural school at the University of Illinois Having just married my college sweetheart I needed a job Fortunately a giant soap company advertised that it needed a "young man who could draw" The company pushed me from advertising to selling store-to-store to being a supervisor to managing a district office to being the president of the Pepsodent Division and finally to Boston in 1945 to become the president of Lever Brothers Co owned by Unilever Ltd London one of the biggest cartels in the world We expanded Lever Brothers by acquiring a number of margarine cosmetics and home permanent companies In early 1949 I flew to London to tell the Unilever board that I wanted to move our headquarters from Boston to New York City and centralize our many subsidiary companies in a single location The board approved In the midst of the manifold problems of moving a huge company to another city the only pleasure in which I indulged was working with the architects whom I'd selected for the new Lever House In our first meeting I said that one of the reasons I had chosen them was because they had never designed an office building and therefore would help me achieve my desire to have a unique building based on the new International Style Their eyes took on a slightly glazed look The design I added was to use materials and ideas to convey the message that our new Lever House had been "spawned by American technology" The knockout blow to the architects came when I announced that the entire ground floor was Iv 054fliO: 441i o5151555Y 0 r4fifor01111 0440fottogo "041 0 '1e 4101140'or 0 01c! 0404 00 00 co 4 14 et 04:1041 0 iell0 411'''''P ''''''OW444I'l 01' 011' 640 elele oe'e 41'''' 'Ilk 01q 440 0 ::1011: liV''''' el i 011' Pi 10:410 'sko lellilloo li 0 8 11111400 eit 1111:14101111 :4101010 Nilo 110 0001 iii 'eltraiFoi owl 4 0 I 1040417 oils 4 i 4 TIN t- --I 4 I i'- IS 4 4 141tri'f 70 i 1 A 4 11' '''-1 I i 4011 4 4 op 1 4 '3 I I ttictbf: i---Art LA oloopor WOO to be open with gardens through which people could walk From the expressions on their faces it was evident that they thought the door would open at any moment and white-clad attendants with a straitjacket would come in and take me away Three months later I returned to London with a model of gleaming glass aluminum and stainless in its simplicity When I took the black-satin cover off the model the 22 British and Dutch directors stared silently Finally a director with a heavy Dutch accent looked up and said "S-Ch-uck it's d-d-iff-r-unt!" For a group of rather old and staid men who had spent their business lives in a Greek-style structure with Ionic columns it was too much to approve But neither did they say no What they did was to reaffirm that as president of the American companies I had "full responsibility for all the American operations" on my return from London I released the story of our company's centralization in New York together with photographs of the model of Lever House Immediately all hell broke loose in the press and along Park Avenue and Wall Street "Who in his right mind would waste all that valuable Park Avenue ground-floor space?" developers asked "Luckman was trained as an architect" a fellow architect said "How could he fail to use the full building area allowed by city codes to put up a bigger building?" And from Wall Street came the comment "It will forever be known as 'Luckman's folly' No one else will ever be stupid enough to build an office building on a residential street" Now 30 years later a couple of dollar-hungry New York developers are trying to undo my "folly" But New York's Landmark Commission has been successful thus far in frustrating them by proposing official landmark designation for Lever Charles Luckman a Los Angeles architect designed The Forum and the Wadsworth Veterans Administration Hospital among many noted projects.