The Buffalo News from Buffalo, New York • 37

Saturday August 27 1977 Buffalo Evening News acing The iscal acts Must Reduce Its Taxes of eco At Each Throats Gunfire in Southeast Asia not Organized Crime Weapon By STEPHEN LYNTON to of of cost cost an our A IN BUALO as elsewhere rising taxes rather than food or fuel are a primary cause of the rise in cost of liv ing Between 1967 and 1976 a middle in come family of four in the Buffalo community saw its cost of living rise 785 percent largely because its per sonal income taxes went up 1432 per cent The figures are comparable for REP JACK KEMP Buffalo Is Overtaxed IN THE MOUNTAINS and primev al forests it is not easy to tell where the bolder runs Thus Cambodian pa trols began to cross into areas Hanoi calls its own and vice versa Things have not been made easier by the na tionalism which in other times: led to wars between the two countries The victors in Cambodia were not going to let themselves be pushed around by those sharp elbowed fellows from Vietnam people in every income group from the very poor to the very rich Each time the state loses a job the effect is to increase taxes still further And New York State has lost 435000 rton agricultural jobs since 1970 In the case of Bethlehem for example the permanent loss of 3500 jobs will cause a loss in state tax revenues of roughly $35 million per year an increase in state expenditures for unemployment compensation of about $21 million per year and a net loss in income for the Buffalo area of more than $40 million per year Thus the expenditures are rising at the same time revenues are falling and the burden falls upon those indi viduals and businesses that remain in the state This of course only exacer bates the fundamental problem THE BUALO COMMUNITY is particularly overtaxed even in com parison to the rest of the state Buffalo currently ranks among the third or fourth most heavily taxed major cities in the United States and leads the na tion's 30 largest cities in property taxes In 1976 however the city of Lacka wanna had an effective property tax rate even higher than that of Buffalo: $4 72 per $100 of assessed value com pared to $467 in Buffalo Much of this tax burden fell upon the Bethlehem Steel plant which paid 67 per cent of all Lackawanna school taxes and one third of all property taxes paid by the Bethlehem Steel Company in the United States though the Lackawanna plant has only 10 per cent of all Bethlehem employes All kinds of go to explain the bloody rivalries But an added cause is the movement of thou sands of Vietnamese peasants brought into Cambodia and Laos during the war with the Americans to act as bearers on the Ho Chi Minh Trail and to provide a myriad of other services Many then settled down in Cambo dia and there was a point in the late '60s when Prince Norodom Sihanouk threw caution to the winds and de nounced Hanoi for having in effect annexed Cambodia's northeast prov inces When the war ended the tough men who took over in Cambodia began to push the Vietnamese settlers out along with the Vietnamese bureau crats Hanoi had installed there WASHINGTON Maryland Gov Marvin Mandel is the highest ranking government official to be convicted under a seven year old feder al antiracketeering law originally designed as a weapon for combating organized crime according to Justice Department officials the skies and the jungle is full of game Here the radio said 'back in 1973 52s used to drop 3900 tons of bombs a day to flush out the guerrillas But now again the green jun gle and on the mountain ranges which stretch toward the border our army combatants are stationed everywhere They patrol from one peak to another walking in the cold under the trees with firm determination to defend the territorial integrity of beloved Cambodia" According to a poll by the antus Company (economic consulting firm) New York is the worst state in the Union for doing business Thus it is not surprising that in addition to Beth lehem many other businesses large or small have curtailed operations in the Western New York area moved away expanded elsewhere or have nounced plans not to expand in area I have renewed my request to Governor Carey and the leaders of the state legislature to move ahead as soon as possible in a bipartisan man ner to implement a program of tax rate reductions both for individuals and businesses I HAVE SUGGESTED the concep tual approach I believe is best The exact details of such a tax rate reduc tion strategy must be worked out by the government and appropriate com mittees But what is important is to move immediately and dramatically we allow our state to be There is nothing wrong with New York State indeed there is nothing wrong with Great Britain that a strategy of reducing tax rates and excessive regulations would not allevi ate The people must realize this is their fight and they alone can win it by bringing pressure to bear on elect ed officials at all levels As President Kennedy said in 1962 rising tide lifts all He was right and now is the time to get our economic tide rising again in the inter est of the people of' our community state and nation BORDERS WITH which aggressive countries? Well in this corner Cambo dia adjoins only its old comrades at arms Laos and Vietnam Hanoi in turn announced a fort night ago that Vo Nguyen Giap who defeated the rench at Dion Bien Phu nearly a quarter of a century ago last week toured the areas abutting on Cambodia and ordered his troops there to combat readiness main tain political security and help to pro tect the territory waters bor der and offshore Other generals have made similar trips to Vietnam's border with I aos to encourage the troops fighting skir mishes there THE LIST WOULD include only the most recent examples of Be thelehem Moog and Carborundum but also Western Electric (2000 jobs) Erie Scientific (270 jobs) Twin Indus tries (1000 jobs) American Standard (600 jobs) Hewitt Robins (715 jobs) etc etc etc The result is a loss of thousands of jobs and millions of dollars in tax revenues and further reductions of services to the people Since 1970 Erie county has lost 22 000 in population and New York State has lost 119000 There has been a net migration out of the state of 537000 many of whom love New York but de cided to increase after tax income by moving out One can easily understand how this happens when you consider that a per 'son moving from New York to Dela ware for example would increase his after tax disposable income by as much as 35 percent When one adjusts per capita income for taxes and the cost of living in New York it turns out that we rank just about last in the country and behind such states as Arkansas West Virginia and Alabama in new disposable after tax income This is outrageous Is it any wonder therefore that we are getting less and less of the former and more and more of the latter? The problem with New York State's economy is very simply exces sive taxation and overregulation re sulting from too much government Politicians have promised government solutions to all our problems and then raised taxes on individuals and busi nesses to finance them Unfortunately political leadership in New York has refused to recognize the consequences of taxation and the direct correlation between the level of taxation in New York and the lost jobs people and businesses from the stare This same political leadership has also blocked proposals to reduce taxes in order to save jobs and bring industry back into the state Bethlehem decision to permanently lay off 3500 workers and to severely reduce steelmaking capaci ty at its Lackawanna plant is only the most recent example of this disastrous trend But this disaster is self induced and can be reversed if people under stand that this is their battle and that they can win BETHLEHEM STEEL cited sever al reasons for its decision environ mental restrictions foreign competi tion and de facto price controls All of these are national conditions which af fect every Bethlehem plant in the United States Therefore there must be other conditions exclusive to New York which dictated that operations would be more drastically curtailed in our area rather than elsewhere Any comparison of living working and investing in New York and other states will immediately show that taxes both at the state and local level are outrageously high as we in West ern New York are painfully aware In other words there is no re ward for working and investing in New York State The reward goes to those who leave and invest in other states New York State has the heaviest state and local tax burden in the United States: $1025 per capita the na tional average is $664 per capita This tax burden combined with the steeply progressing personal income tax rate in New York is the major impediment to creating jobs and a better life for the residents of New York By MARK GAYN GUNIRE is being heard again and blood is being shed in Southeast Asia but this time no one can blame the Americans In fact what is hap pening is that victors in Vietnam Laos and Cambodia true Red Communists all are now at each throats intelligence has known for a couple of months of the discord and bloodletting in the Communist camp In the far south where Vietnam and Cambodia adjoin there is a delightful little town of Chau Due which I remember well because a decade ago for two nights running I was caught there by Communist mortar file The refugees who managed to make it to Thailand in the past month reported that in May and June Chau Due had again been under fire from the Cambo dian side and there had been casual ties The reports were confirmed the other day by the prime minister of Thailand But one need no longer rely on anti Communist sources Now the story is being recounted by the radio voices of Vietnam and Cambodia The enemy is never mentioned by name but the areas described leave no doubt of wty is fighting whom THUS RADIO Phnom Penh this week said Cambodia had mobilized its troops in four areas stop enemies from encroaching on Cambodian terri tories" Of the four areas it named one adjoins Thailand with which Cambodia has been in a virtual state of undeclared pocket war The other three touch Vietnam In all Radio Phnom Penh said Cambodia's troops have defended the nation's sovereignty" Earlier this month another broad cast spoke of the northeast part of Cambodia where the mountains pierce TM Christian $cine Montior Israel has the right idea Defensible 1 SUBMIT that we could reverse this effect if New York State tax rates were reduced A reduction in personal and business income tax rates will im mediately increase the aftertax in come of every worker and enterprise in our state increase the incentive work and produce reduce the doing business and lower the hiring new workers This leads to an expansion nomic output and employment and thus increasing tax revenues to gov ernment at all levels I believe we should reduce the per sonal tax rates in New York by at least 25 to 30 per cent and it can be phased tn so as to assure an orderly budget process I believe so strongly in the impor tance of tax reduction as the best way to expand employment increase per sonal income and create general pros perity that I have re introduced my Tax Reduction Act which would do the following: all federal income tax rates by an average of 30 percent over three years the corporate tax rate by 3 percentage points over three years increase the corpo rate surtax exemption to $100000 to help small business This is the same strategy President Kennedy used in the early to get the economy growing again 1 BELIEVE that if such a program is implemented at the ederal level it will do today what it did in the 1960's to create the millions of johs America needs and give relief to all those who have been so grievously hurt by infla tion over the past several years Since New Yorkers also pay more ederal income taxes than anyone else due to the high cost of living in the state the benefits of such a pro gram will be particularly relevant to New York and the Northeast Com bined with a similar program at the state level it will restore economic growth and prosperity to the state with immediate results New York is the Empire state It has 7 million jobs that need to be re tained and expanded and it has a large industrial and productive base that is presently underused with a skilled labor force and patural re sources All that is necessary is to re duce the excessive rates of taxation and regulation which are choking the people and the spirit of enterprise of our state Mandel Prosecution Used Rackets Law By JACK KEMP Hinme Ri pn'hi'nttitiiffi XNih Ihilrit GENERALLY SPEAKING if you tax something you get less of it if you subsidize something you get more of it In New York State we tax work growth investment employment savings and productivity while subsidizing non work consumption welfare and debt It 7521 OS II A A A TS aSi I Belated Reforms Defusing Time Bomb of Public Pensions By NEAL PEIRCE BOSTON Belatedly but with luck in the nick of time state and local governments are starting to defuse the time bomb of massive underfunded public worker pension liabilities The process is not going to be easy or cheap There are decades of ne glect of expedient political deals of poor pension fund management and unconscionable concessions to privi leged classes of government workers to lie paid off Massachusetts' solution for in stance is a 41) year plan that will re quire after a five year phase in to soften the fiscal blow expending 26 per cent of state and local payrolls each year to cover the Bay huge $126 billion unfunded pension liability Officials of Boston and other hard pressed localities worry whether they can afford the massive annual pay ments to the pension system But Car men Elio chairman of Massa Retirement Law Commission and chief architect of the reform plan warns that if the pension plans put on a sound basis bankruptcy will be inevitable The pension commitments many states and cities have made to their workers especially when an employe can retire with more money than he was making on the job amount to punishment of the says Tennessee State Rep John Bragg chairman of the National Con ference of State public pension task force Bragg reports that in 16 states (New York is not included on his list) a school teacher retiring at 65 after 25 years' service will receive combin ing pension and Social Security bene fits an actual increase tn after tax disposable income A PHILADELPHIA city worker who retires hi hb nttei 39 years on the job will drw 129 iei cem ol his final take hiimo jav through combination of his city (tension and Social Security pension expert Bernard Jump deter mined In petroit the comparable fig ure is 116 per cent in New York City 127 pet cent 4' 3 Jil 1 NEAL PEIRCE There are some states and local ities where employes are offered far less But on the average according to a Twentieth Century und report pen sions for state and local government workers are roughly double those the worker in private industry can expect Many state and local retirees are pro tected by automatic cost of living ad justments for instance features virtually non existent in private indus try pensions Sloppy actuarial work and fund management by political cronies have compounded the problem The net re sult is that unfunded pension liabilities obligajions beyond accrued retire mem funds are at alarming levels from coast to coast Examples: California $136 billion Illinois $57 billion New Jersey $53 billion Ohio $35 billion lorida $28 billion Alabama $1 billion Connect icut $24 billion Louisiana $11 billion Maryland $25 billion Pennsylvania $34 billion South Dakota $11 billion Tennessee $1 billion Eventually taxpayers are going to have to pay all those bills plus the cost of the federal over ly generous civil service and military benefits which labor under an unfund ed liability estimated as high as $790 billion PRESIDENT CARTER said on June 13 he'd appoint a blue ribbon presidential commission to review the whole public pension field But two months have passed and panel has yet to emerge or concrete action one has to look to the stale level Massachusetts once the nation's worst case offers the most dramatic example breakthrough came after Retirement Law Commis sion created a computerized data bank reflecting every detail of the 101 state and local pension systems The data hank the first of its kind anywhere can cost out any proposed retirement benefit change on short no tice A fiscal note is attached to any pension bill the legislature considers One result: no jMnsion liberalization since 1973 "In the Elio says "everyone used to say pass a jicnsion bene fit today and worry about the cost tomorrow' But tomorrow is today now the costs are here and they just can't keep being passed on" Before the legislature accepted the new 40 year funding plan Elio cam paigned across Massachusetts for a year convincing taxpayers and public employes that without a reform the fiscal position would be danger ously weakened with government workers in jeopardy of losing their pension benefits Government employe unions previously hostile ilropjied then opposition DATA BANK will now be exjianded across New ug land under a grant from the Labor Department permitting instant comparison of all six public pension plans and effects of proposed changes The project will lie guided by advisory committees of governors legislative leaders pension plan administrators and professional actu aries and investment counsellors At least half the states have start ed comprehensive reviews of state and Iwal pension plans moved to set up consolidated statewide retirement sys tems or begun for the first time to apply actuarial studies to proposed pension plan changes Governors have started to veto pension "sweeteners" unthinkingly approved by state legislatures Delaware's legislature voted to limit new total retirement benefits (including Social Security) to 75 per cent of final pay New York began to clean house with a reduced benefit plan for all new state and local government workers that ties in So cial Security benefits and is exacted eventually to reduce jiension costs by some 29 per cent Reduced benefits generally apply only to new employes not workers al ready covered on the legal theory enforced vigorously by courts that pension concessions once made are contracts a government can't break But the Tennessee Supreme Court last year said that if paying full pensions ever threatened the state's fiscal stability the state might renege on its commitments WITH THE MOUNTAIN of jiension debts states and localities must pay off in the next quarter century in some cases exceeding active payrolls a distinct chance of default in paying pensioners unless early reforms are made There have already boon sufficient stalo reforms howevei to take the wind out of the sails of a congressional effort to impose on state and local pen sion systems many of the rejiortiiig disclosure and fiduciary resjionsibility requirements already applicable to private sector pension plans under the Employment Retirement Income Se curity Act of 1974 popularly known as ERISA Although the antiracketecring stat ute was part of the Organized Crime Control Act of 1970 it has been user! increasingly by federal prosecutors to deal with white collar crime and politi cal corruption Mandel and five code fendants were convicted Tuesday both of racketeering violations and of mail fraud a more common charge in po litical corruption trials "It's certainly the first time that a high state official has been convicted under the (antiracketeering) Daniel Hurson one of the assistant US attorneys who prosecuted Man del said after the verdicts were announced Hurson and other officials also noted that the amount of money Man del and his codefendents stand to for feit to the US government as a result of their racketeering conviction appar ently is larger than some forfeited in previous antiracketeering cases The antiracketeering law provides in addition to maximum fines of $25000 and prison terms of up to 20 years that violators forfeit their ille gally acquired property THE VALUE of the stock in the Marlboro Race Track which apparently would have to be for feited has been placed at about $2 million Another venture apparently subject to forfeiture is the Security In vestment Co from which the Social Security Administration leases offices The company is helieved to be worth at least $2 million While the political rank of the chief defendant and the sums of money at stake were unusually high lawyers differed over whether the convictions broke new legal ground Arnold Weiner Mandel's attor ney asserted that the trial raised number qf unusual and novel ques tions" including what he termed a "new theory of mail fraud" Such issues ajiparently will figure in ap jieals of the convictions Weinei did nut elaborate on whai he viewed as the novelty of the jury's decision Woinei had argued that the anti racketeering law under which Mandel was convicted applies only to organ ized crime rather than to allegations of political corruption con tention was rejected in March 1976 by US District Judge Herbert Mur ray who was ruling on preliminary motions in the case SEVERAL LAWYERS described some of the mail fraud charges as unusual These alleged that Mandel had defrauded the public by making false statements at press conferences and then sending transcripts of those conferences through the mails On the whole however govern ment lawyers familiar with racketeer ing and mail fraud prosecution said that they saw little legal novelty in the charges on which Mandel and his codefendants were convicted "It's not novel" said a congres sional staff member who helped draft I he 1979 antiracketeering law and is knowledgeable about mail fraud cases "The clearest precedent for it is the Kerner Otto Kerner a former Illinois governor and federal apfiellate judge was convicted of mail fraud and other charges in a racetrack stock scandal at a 1973 trial presided over by US District Judge Robert Taylor who also presided at Mandel's trial Kern er who served part of a three yeai prison sentence died last year A Justice Department booklet that analyzes the 1970 antiracketeering statute cites a number of previous cases including prosecution of several government officials IIISTORIUALLY the Justice Dc partment's analysis notes mast crimi nal laws were "narrowly drawn ami narrowly to deal with specific crimes such as gambling or extortion In contrast the 1970 statute is more broadly framed to allow prosecutors to demonstrate the exist ence of a "pattern of racketeering As one lawyer noted the antiracke teering law permits prosecutors to present more evidence to a jury than would be allowed under more narrowly drawn statutes "The jury gets to find out everything that hapjiened" re marked the lawyei who asked not to be identified He said that the antiracketeering law also differs subtly from conspiracy charges in part because it spares jiroseeutors the need to prove that a sjieeific agreement took place among alleged conspirators to engage in criminal activity.