European Stars And Stripes (Newspaper) - July 21, 1985, Darmstadt, Hesse                                Taxed to the Max the you want to up for tax Reform you a feed in by Jim Luther associated press Treasury Secretary Joseph Barr was droning on about Trade and a balanced budget in his final report to the joint economic committee before the Johnson administration left office in january in the course of his he casually mentioned a new Treasury finding that 120 americans with in comes of or More had paid no Federal tax in this kind of unfairness could trigger a Middle class taxpayers Barr the committee and the reporters woke the resulting firestorm lasted through Barr recently told the House ways and Means As a Congress later that year passed a minimum tax aimed at nabbing some of the wealthy individuals and corporations that escape the Federal tax net by taking Legal sixteen years a new Treasury report shows 262 americans above the level paid no Federal in come tax in and president Reagan is advocating a tougher minimum tax to symbolize support for bringing fairness to the tax for the same Reagan is asking Congress to limit the deduction for business meals the three mar Tini lunch write off that has been under attack since it was known As simply a Martini and so the Battle for tax Reform goes Only the characters a Quarter Century tax overhaul Effort demonstrates mainly that if the goal is cutting credits and a presidents appetite for major change is greater than that of con there Are More of those preferences in the Law and More costly ones than Ever president Kennedy recommended lower tax curbs on tax shelters and a crackdown on expense each count he wanted to withhold taxes from interest and he he offered a package combining general tax cuts with reductions in the deduction for charitable a tougher tax on capital gains and scaling Back some special tax Breaks for Congress bought the tax Cut and Little president Johnson had better in addition to passing the minimum tax in Congress raised taxes on capital limited deductions of capital restricted the write off for created a Low income allowance for the poor and raised the personal exempt in the Scales tipped in the other direct the lawmakers limited the amount of earnings that could be subject to the top tax but they also raised the four years Congress liberalized the Standard created the earned income credit for poor working families and authorized tax deferred contributions to retirement accounts for workers not covered by a company tax shelters gained the attention of Congress during the Ford in when the internal Revenue service audited fewer than tax returns involving questionable shelter last year the figure was about As part of a voluminous the lawmakers re All it shrinks state and local stricter deductions allowed for investments through limited partnerships in such areas As Gas and movie the 1976 package also included a broadening of the minimum tax and yet another increase in capital gain president Carter came to office in 1977 decrying a disgraceful tax he proposed wiping out a Long string of deductions that generally benefited Only the Wel Todo or Corpora he also backed some new tax provisions to courage Energy in Congress accepted the raised the personal exemption and Standard deduction to help Lowe income and once again toughened the minimum it voted to repeal the deduction for state and local gasoline taxes but dropped most of the other reforms Carter had jarring Prospect for countless americans by Chet Currier associated press the Prospect of sweeping change in the tax Laws has scrambled the financial plans of count less americans in just about every income consider the hypothetical Morrison which had planned to buy a vacation Home As an investment with both psychological they financial Dan and Barbara in their late both bringing in a combined income of a they live with their two preschool children in a House they bought four years ago for with a mortgage at a fixed interest rate of the Morrison figure their House is now Worth about giving them about equity in fur they have been Able to save in a Bank Money Market Deposit aside from the their Only debt is a car loan on which they pay a but except for life insurance and in individual retirement they have no other Lon term not Long a three bedroom cottage in a popular vacation Community caught their they had the Cash in their Bank account for a Down they figured that the vacation Home would serve their purposes in several it would be an Ideal place to take the children on vacation each summer As they grew and when the children were ready for Dan and Barbara they might be Able to sell the cottage at a profit Large enough to help pay the tuition now they Are having second presi Dent reagans proposal would severely curtail the tax benefits the cottage could offer when they last they found that prices for properties in the area were falling in anticipation of tax what should they do Neil a los Angeles financial says they might consider buying the cottage in the soft current he they might be Able to get it at an attractive to make certain that they will be Able to deduct All their interest Alexander they might consider refinancing their year round Home and buying the cottage for in so they still would be taking a bit of a Alexander proposed and possible future changes in the tax Laws could depress further prices of second the second Home Market has been tremendously adversely he the question How far Down is Down As for another alternative the Morrison had been consid ering investing in a real estate limited partnership Foj income largely sheltered from current taxes Alexander says such a Deal May still be he 1  put All my eggs into that if the Morrison think they might want to increase their life insurance coverage in the Alexander suggests that they consider buying a Universal life policy a flexible Type of policy in which premiums and the amount of insurance coverage can be and in which Money invested earns Market interest rates fore the end of the Reagan has proposed taxing the yearly buildup of Cash value in insurance policies sold after what about stocks or which would retain a relatively favourable tax status under reagans plan Alexander notes Stock and Bond prices have recently risen sharply As interest rates have fallen and investors have evaluated the tax tax Reform or no tax he a venture into stocks and Bonds now still involves the Standard risks the possibility of a or a rebound in interest or a revival of reversing a policy of several the lawmakers granted More favourable treatment to capital then along came Reagan with the biggest tax Cut in history rate cuts for everybody and a generous depreciation system for Congress added a lot of benefits but took away the Price tag came in 1982 and 1984 with deficits investors and corporations were hit with tax some wage earners also were affected the medical deduction was restricted and income averaging was made less reagans 1985 overhaul plan probably the most sweeping in history is now being examined by con it would Cut tax rates for most individuals and raise the personal exemption and wipe out or reduce several deductions and it would remove from the tax Rolls just about every person or family with income below the poverty it the president Cut taxes for 58 per cent of people and raise taxes for 21 and keep 21 percent of the people about the the presidents toughest problem with the Bill is Likely to be convincing Congress to repeal the deduction allowed for state and local As few people on Capitol Hill will bet against those Likely to lose the most by Randolph Schmid associated press president reagans proposal to eliminate the income tax deduction for Money americans pay in state and local taxes is generating the biggest uproar from those who appear Likely to lose the based on the theory that americans  be taxed twice paying Federal taxes on Money they have already paid in state and local taxes the deduction has been a part of Federal rules since the in come tax was but the provision is not really Reagan giving the biggest benefits to residents of High tax states who itemize their Federal officials eliminating the deductions would generate an extra billion in Revenue for fighting the huge Federal National labor leaders have strongly opposed the telling the House ways and Means commit tee that it would mean higher taxes for Middle income wage earners and would Force states and municipalities to curtail needed on a family would pay an extra in Federal income taxes each Accord ing to a study done by the congressional research in High tax new the increase would be for the typical the study at the other end of the a typical Wyoming family would pay an extra state and local officials also say that requiring people to pay More in Federal taxes leaves them less for spending and for state and local they people will resist increases in state and local taxes even More strongly than they do now if they Are unable to deduct if that the officials it would hamper their ability to fund state and local programs at the same time that Federal expenditures for them Are being new York Mario Cuomo has been vociferous in leading the Battle against the terming it a Ripoff dressed up As Cuomo has accused Reagan of trying to Divide the country by pitting High tax states against those with lower this plan overturns the Central idea at the heart of our Republic that we Are one not 50 this if it is would pit state against state and Region against he told a congressional but White House communications director Pat Rick in a letter to the new York called Cuomo a fast talking lobbyist for a reactionary liberalism that would kill tax Reform in its rather than surrender a cherished special interest a revolution Uwel it Page 14 the stars and stripes july exemption that benefits mostly the Cuomo counters that there Are important reasons Why states such As new York Levy higher taxes than some other we have More poor we have enormous numbers of welfare there not All they come from All Over the we have a High tax not because were luxuriating in new York but because we have to pay for Cuomo said on a recent broadcast interview the democratic governor charged that the proposal punishes states that Are trying to provide essential services in the face of massive Federal spending not just democrats oppose the new York Republican Alfonse Damato recently joined Mario in staging a mock Boston Tea they tossed into the East River boxes marked no double just across the state Pennsylvania Dick a is backing Rea his states taxes Are relatively and the current deduction tends to Benefit Only about on third of the states those who itemize in Thornburgh pennsylvanians will Benefit More from an Overall reduction in Federal tax rates than from keeping this under the current Thornburgh taxpayers in states with Low local taxes Are in effect subsidizing the Federal Levy on those in High tax Juris who can deduct the local the effect of the proposed Reform would be to redress that imbalance and provide an across the Board Cut in taxes for All taxpayers in All 50 said and even democratic Michael Dukakis of Massachusetts a state with relatively High taxes said that the presidents plan is Worth with any deduction being evaluated in the con text of the entire the Contention that the current system causes Low tax states to subsidize others Drew a rebuke from Carl if we Are going to talk about then we should look across Leboard and take into account that Michigan Only gets 79 cents Back for every Dollar it sends to this proposal could Worsen the imbalance that already exists in How much Michi Gan gets Back for every Dollar it sends the Federal in where the congressional research serv ice says the added Cost would be Well below the National John a Democrat who is also president of the National governors opposed total elimination of the the Federal deficit is the 1 Issue right Carlin and if concern about deductions Side tracks attention from that problem the result could be on the local government new York mayor de whose City levies its own in come has joined Cuomo in spirited opposition to dropping the stating that the loss of in come would be devastating for new York Cleve land mayor George president of the National league of has pointed out that groups Strong opposition to the the withdrawal of Federal funds has shifted a greater Burden to state and local and the elimination of deductibility could add to the strains Al ready he and Detroit mayor Coleman Young said that the proposal will be bad for those of us who live in for the simple fact that we pay High both state and local governments will be hard hit by the Elimina Tion of deductions for state and local and especially the property said Phil president of the National association of just As the Federal budget is about to shift greater financial responsibility for Domestic programs to local this proposal would seriously limit their flexibility to raise revenues to meet this Respo Sibili the stars and stripes Page 15