New Braunfels Herald Zeitung (Newspaper) - March 1, 1983, New Braunfels, Texas
4 New Braunfels Herald-Zeitung Tuesday. March 1,1983OpinionsHnrald-ZeitungDave Kraaer, General Manager Bobart Johasoa, EditorGuest viewpointLoeffler says no to new taxes
By TOM LOEFFLER U.S. Rep . Dist 21
The looming budget deficits with which we must contend certainly present a “clear and present danger," as the President has said. Already, our Budget Committee hearings are focusing on the potential impacts of these deficits and on alternatives that could help ease this enormous pressure on our economy, at a time when our economic indicators show that recover, has begun.
Certainly Congress must consider all responsible means for responding to these deficits. My concern is that in the rush to address the problems of the deficit, some are responding by proposing wholesale tax increases.
One proposal, which has received a great deal of attention, had been put forth by the Chairman of the tax-writing Ways and Means Committee.
Dan Rostenkowski. He recommends a freeze on all the tax reductions which were enacted in 1981 and are due to become effective after December 31, 1983.
While such an alternative would preserve the third year of scheduled tax reductions enacted under the Economic Recovery Tax Act, other aspects of the Rostenkowski plan are cause for serious concern. In fact, his plan would, in effect, increase taxes by $138.7 billion through fiscal 1988. Most of the higher taxes would be paid by the average working taxpayer, and a substantial portion would fall on the backs of small businesses, family-owned farms and ranches, and anyone who saves. Among the increases :
• $97.9 billion would be realized by repeal of the tax indexing provision
scheduled to begin in 1985. Taxpayers earning less than $50,000 make up 78%
of those who would benefit from indexing.
• $5.2 billion would be realized from low and moderate income taxpayers who make charitable contributions but do not itemize their deductions.
• $13.2 billion would come from the repeal of the new net interest exclusion designed to increase the incentive to save.
• $1.9 billion would come from limits on the expensing and investment tax credit provisions which were designed to aid small businesses.
• $6 billion would come from higher estate and gift taxes, a protion of which will fall on small businesses and family-owned farms and ranches.
• $1.1 billion of the tax increase would affect royalty owners and producers of newly-discovered oil.
As one who has been at the forefront of the fight for tax reduction and
reform — I see the Rostenkowski plan as a tragic mistake. For example, without indexing, only the Federal Government will benefit from higher inflation by collecting more and more revenue as taxpayers are pushed into higher brackets. If indexing is repealed, we will have lost our discipline to control spending in the future and Congress will have been given a blank check to inflate the economy in order to collect more of the taxpayer's hard-earned money.
The estate and gift tax is a punitive tax which, in the past, has denied us the incentive to build up anything of value to pass along to our children, our heirs and our other beneficiaries.
The “windfall profit" tax. which is really an excise tax, is the most heinous and ridiculous tax ever levied and the proposed tax freeze would effectively w ipe out hard-won gains in the necessary phased enhancement of
the royalty exemption slated to increase from two barrels per day in 1983 to three barrels per day after that. Also, the "windfall profit" tax on newly discovered oil is presently scheduled to decline from 25% in 1983. to 22.5% in 1984, to 20% in 1985 and 15% in subsequent years. The freeze would prevent that decline. I helped lead the fight in past Congresses to assure that additional taxes not be imposed so unfairly on our beleagured energy industry, and I am prepared to lead the fight again, if necessary.
Tax proposals such as these threaten the very real advances made over the past two years. A recovery that rests on the principles of budget reductions and tax cuts. In rushing too hastily to judgement, we would undermine these very strong econimic principles of recovery for we will never balance the budget without
economic growth. We must not act precipitously. Instead we must consider all proposals with great caution to assure that our economic recovery is not subverted, just as we are beginning to see the fruits of our endeavors.
Tax proposals such as these threaten the very real adcances made over the past two years. A recovery that rests on the principles of budget reductions and tax cuts. In rushing too hastily to judgement, we would undermine these very strong econimic principles of recovery for we will never balance the budget without economic growth. We must not act precipitously. Instead we must consider all proposals with great caution to assure that our economic recovery is not subverted, just as we are beginning to see the fruiLs of our endeavors.
James J. Kilpatrick
A surprising vote for withholding interest, dividends
Fewer jobless through defense
When it was all over at Asculum. back in 279 B.C., and the sun was setting on the battlefield, and aide came up to General Pyrrhus. “Well," said the aide, "we whipped the Romans this time."
Py rrhus looked at the bloody field He had lost two-thirds of his army. He looked at his aide and uttered the sentence that made him immortal: “One more such victory," said Py rrhus, “and Weare lost."
It is an old story, but it is a story that American bankers might want to think about. The bankers have mounted a massive lobbying campaign to repeal the tax withholding law that Congress approved last year. The campaign has produced the heaviest mail on Capitol Hill since the 1978 fight over the Panama Canal. Says Carroll Hubbard, who represents the First District of Kentucky, "It’s awesome."
But in the process, the bankers have taken on iii the chairman of the Senate Finance Committee, 2i the chairman of House Ways and Means, (3» the speaker of the House and it the president of the United States At the moment, because they have rounded up more than half of each chamber in support of their repeal bill, it looks as if the bankers may win. If they attach their bill as a rider to some other legislation the White House sorely wants, such as Social Security, they may even push the president into a corner where he has to sign the measure willy-nilly. Victory! They will have whupped the Romans.
Under the withholding law, scheduled to become effective in July, banks and corporations whould be requned to treat the payment of interest and dividents in somewhat the same fashion that all employ ers treat wages and salaries Periodically, IO percent would be withheld as income tax and paid over to the Treasury. This is not a new tax in any sense Subject to certain exemptions, income from dividends and interest is taxable income.
The trouble is, according to Sen. Bob Dole, R-Kan , that about ll percent of interest payments and 15 percent at dividends never are reported on individual tax returns.
The withholding law, he says, "will cut these non-compliance rates in half, and raise almost $4 billion each year "
I may be in a small minority, but I see nothing wrong w ith the act. On the contrary. I see much that is right. To listen to the bankers' propaganda campaign, you might suppose that the idea is to penalize millions of little old ladies in tennis shoes. Baloney! The act provides a simple mechanism by which old folks in low-income brackets may exempt themselves from the law.
The bankers also are cultivating the impression that the act will cost them "untold billions" in paperwork. This too is baloney. Banks and corporations already are required to compile and report their payments of interest and dividends. In all but the smallest banks, the transfer of withheld taxes can be accomplished in the flicker of a computer’s eye.
The repeal campaign has put some odd fellows in bed together. In the House, such conservatives as Kemp of New Vork. Paul of Texas and Edwards of Oklahoma are co-sponsors with such liberals as Mikulski of Maryland, Simon of Illinois and Conyers of Michigan In the Senate, Helms of North Carolina and Tsongas of Massachusetts are walking hand in hand for repeal. Both Republicans and Democrats see an opportunity to put themselves on the side of the little old ladies, which, politically speaking, is a nice side to be on.
But the act is not aimed at the little old ladies It is aimed at the fat cats who have large incomes from dividends and interest and cheat on their income tax returns Once this truth is grasped, the political advantage will shift.
In a speech to the American Bankers Association on Feb. 17, Senator Dole denounced the banker’s advertising campaign as false and irresponsible. He gave them a pointed warning; If the bankers succeed in knocking out the $4 billion m estimated revenues from withholding, the bankers had better prepare themselves for alternative measures they will find even more distasteful. For Pyrrhic victories, one pays a heavy price.
In an argument with Michigan Sen. Donald Riegle last week. Defense Secretary Caspar Weinberger reminded the legislator that 154,000 jobs depended on defense contracts in Michigan.
I guess I didn’t realize that unemployment was a consideration in the Defense Department’s budget. If Secretary Weinberger sees his budget of $239 billion as primarily a jobs program, he should have told us that before. We might all feel differently about spending that much money if we understood that we are basically building missiles, tanks, airplanes
and nuclear submarines as a means of reducing unemployment.
The Pentagon would have some persuasive arguments on its side if it said that, over a long period, making weapons would lead to fewer people being out of work For one thing, if we keep making weapons and the Russians match us, weapon for weapon, it could lead to a lot fewer people in the world. This alone would be a major factor in reducing the number of unemployed. It would, at the same time, reduce the number of employed people, too, but no program is perfect.
I had no idea tha Casper Wein-berger’s interest in weapons was purely humanitarian. Apparently he just can’t stand to see long lines of unemployed people on television every night and he thinks making weapons is the best way to shorten the lines More power to "Cap" Weinberger, I say. If we actually get into a shooting war, unemployment could be reduced to nothing, along with the population in general.
The question of where to put the MX missies has never been resolved. If Weinberger is consistent in his thinking and wants to use defense spending as a means of reducing unemployment, he will recommend that those MX nussiles be placed where unemployment is greatest. For instance, if a cluster of MX missiles were placed in downtown Detroit, their presence would have a twofold effect on the labor force. First, a lot of unemployed people would leave town, thus improving Detroit’s linage as a place where there are long lines of people not working. A second, more drastic possibility would be, of course, if the Russians decided to eliminate those missile sites. Some people might not think a nuclear missile strike on midtown Detroit would be good for the city, but it would, undeniably, cut down on those lines.
There are people who don’t agree with Weinberger that making weapons is a good way to reduce unemployment. A great many Americans whom Weinberger might consider fuzzy thinkers, believe that there are more important things to be done with our money. They suggest that repairing our bridges, searching space and improving the nation’s educational system would be better things to spend money on than weapons The President himself has proposed a $4.3 billon emergency jobs program. The argument is, how do you spend it so the most people get jobs they need, doing work that benefits us all?
Most public service jobs in any emergency program usually involve physical labor. This is terribly unfair because it isn’t necessarily laborers who are unemployed. Today there are so few people left in the country doing any physical labor that if all of them lost their jobs it wouldn’t make a line long enough to show on a television news broadcast. You can’t expect an unemployed architect, an accountant or a secretary to take an emergency job filling potholes with asphalt.
Unemployment is such a difficult problem that you can see how Weinberger apparently came to the conclusion that making weapons is an effective way of keeping people employed.