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THE DAILY NEBRASKAN
MONDAY, FEBRUARY 24, 1959
PEAPiy TiRKHlDlCKIHOSS CACIUUS
Attempting to open loopholes
Bankers to test tax reforms
by Rowland Evans
and Robert Novak
Washington The suddenly sprouting Con
gressional urge for tax reform will get an early
test when the banking industry, which usually wins
what it wants in Washington, attempts to pry open
a recently closed tax loophole.
The closing came last fall in a quiet, clever
maneuver by Stanley Surrey, winding up eight
frustrating years as Assistant Secretary of the
Treasury for Tax Policy. With a stroke of the
pen Surrey boosted by an estimated $100 million
a year taxes paid by commercial banks.
AS SURREY was well aware, both the outgoing
Johnson team and the incoming Nixon team at
the Treasury had ties to the banking industry which
made it all but impossible to overrule his regula
tion. Thus, only Congress can restore the bankers'
tax advantage a preview of similar confronta
tions between tax reform sentiment and lobbying
pressure in the coming tax reform struggle.
Like most big industries, the bankers enjoy
a special tax privilege: a tax formula permitting
them to take an automatic deduction equal to 2.4
percent of their outstanding loans as a so-called
bad debt reserve.
SINCE ACTUAL bad debts are well under 1 per
cent of loans, this formula amounts to a bountiful
gift from Uncle Sam. This was precisely the view
of Stan Surrey.
Surrey, an ardent tax reformer, had tasted
more failure than success at the Treasury and
last fall was chagrined when President Johnson
suppressed his tax reform proposals. As a valedic
tory, therefore, Surrey began rewriting tax regula
tions in his closing days including the one on
bank taxation.
Instead of reducing the 2.4 percent, Surrey
ruled that the bad debt percentage could not be
applied to absolutely safe loans most notably
loans to the U.S. government. Nobody knows ex
actly how much that will cost the bankers in 1969,
but $100 million is the educated guess. Accordingly,
Surrey's stroke of the pen was an instant tax
reform of major proportions.
Neither of Surrey's two superiors in the
Johnson Treasury Secretary Henry H. (Joe)
Fowler or Under Secretary Joseph Barr cared
for the change. One report circulating among lob
, byists is that Fowler was restrained from killing
Surrey's rule change only when Surrey threatened
to resign with a blast against the Johnson tax
policy a report confirmed by some and denied
by others.
Adept at bureacratlc maneuvering, Surrey
issued the change in regulations last October while
Fowler was in Geneva for a monetary conference.
Surrey's action could have been overruled in the
Johnson administration's closing days. But when
Fowler resigned as Secretary in December, all
hope expired for the bankers.
The reason: Barr, Fowler's .successor as
Secretary in those closing weeks, had accepted
a post-government job with a leading Washington
bank the American Security & Trust Co. Barr
rightly felt constrained from interfering with Sur
rey's handiwork and so informed the banking in
dustry. That was particularly glum news for the
bankers, because Barr's successor as Secretary
in the Nixon administration, David Kennedy, was
coming to Washington from the Continental Illinois
Bank in Chicago and was just as unwilling as
Barr to bail out the banking industry at the risk
of creating a conflict of interest
Thus, bankers know their onlyjiope is Congress.
Legislation to overrule Surrey would take too long,
but the Joint Committee on Internal Revenue could
pass a resolution instructing that Surrey's regula
tion be revised.
However, leading House tax-writers arc
unsympathetic to the bankers' position. Indeed,
there is some feeling in Congress that Surrey did
not go far enough and should have limited the
bad debt deduction to the actual amount of losses
running at less than 1 percent for an industry
enjoying unprecedented profits. Whether that Con
gressicnal feeling persists should provide an ac
curate barometer for general tax reform.
Campus opinion . .
Concern over LB 8
Dear editor:
I am a native Nebraskan, a registered voter
there and a 1968 graduate of the University of
Nebraska. I am currently a Vista Volunteer
(Volunteer in Service to America) in Wheeling,
W. Va. I want to come back to Nebraska someday
and I want it to be a good, just state to live
In.
I have been following with deep concern reports
In the Daily Nebraskaa of the progress of LB
8 (the marijuana bill). Let It be clear that I do
not live in great fear of marijuana as many
Nebraskans do. But I do have an open mind about
the demerits and merits of marijuana. My
overwhelming concern, however, is with the role
Nebraskans, through their legislature, think they
can take in legislating what they perceive to be
morality.
MY CONCERN is with the power this
legislature thinks it has to prescribe penalties
which lap over into public institutions which have
no cause-effect one to one relation with the crime.
Until you can tell me that the smoking of pot
and the successful completion of college are
negatively related or related at all, then I fail
to see what is going to stop the legislature from
preventing other law violators from getting their
right to an education.
My concent is with Sen. Carpenter, sponsor
of the bilL I've had my bellyful of his hypocrisy.
What makes an 18-year-old more capable of making
a decision about drinking alcohol than making one
about smoking marijuana or voting for the politi
cian who will represent him in making the foregoing
decisions? Carpenter obviously has a lot more to
gain from selling liquor to 19-yaar-olds than he
does from giving them the vote, which he so elo
quently spoke against last November.
WAKE UP NEBRASKANS. Singling ont
students for punishments additional to that of other
violators of the same law is cruel and unusual
punishment and clearly unconstitutional But why
let the legislature think it can pull off this breach
of "law and order?"
Sincerely,
Dan Dickmeyer
Of what value is the Centennial?
From the widespread response which followed
TLC's look at the Centennial Convocation, one thing
became very apparent: for most people at NU,
the 100th year is not much different from the
99th.
True, students and faculty may be more aware
of the Cornhuskers' glorious tradition, thanks to
a variety of "Centennial editions." True, others
may enjoy one of the several Centennial concerts
and lectureships planned for this year. But one
wonders what of lasting value (other than the
Centennial Time Capsule) will remain as a result
of the Centennial celebration.
L THEIR CONCERN for commemorating the
past and celebrating the present, University leaders
have largely overlooked the most important ques
tion which thus becomes, "Where should the Uni
versity go in the next 100 years?"
If the school were to answer this question
thoughtfully and completely, it would leave a
valuable legacy to those students and faculty who
will foDo??.
In undertaking such a venture, the University
would profit from studying the work of one of
its Big Eight cohorts, the University of Oklahoma.
This week Oklahoma will begin pubication of '"The
Future of the University," the summary report
of a study conducted by 22 panels in all areas
of Sooner campus life.
a
THE PROJECT WAS initiated by Dr. J. Herbert
Holloman, Oklahoma president in 1967, when ie
appointed the panels ana an executive Planning
Committee to make a oetaiiea siuay of uie
university, its mission, organization and
resources.
Nearly 600 persons, drawn from the student
body, uie iaculty and stati, ousiness, uie protessiuiis
ana the pubuc served on tne planning panels, iney
we.e askea to make aetailea studies oi every aspect
of the University community from such practical
matters as parsing and living taciiities to the
academic and spiritual life on the campus.
The reports which emerged from these com
mittees have been synthesized into book form
for publication throughout the state. Already, many
of their recommendations are finding their way
into university policy.
As Dr. Holloman says of the report, "It In
dicates a general direction for the university."
IN THIS CENTENNIAL year it seems
reasonable that NU, too, should be concerned about
"The Future of the University." The 100th birthday
celebration affords an excellent opportunity to
review past accomplishment with an eye toward
future growth.
Such comprehensive planning has been done
In the areas of campus expansion and facility con
struction already. But these are only minor
determinants of the quality of campus life. Few
have pondered the tremendous effects which the
coming years will have on such diverse areas as
classroom curricula, post-graduate programs,
Greek living, student activities, and intramural
facilities.
ALL OF THESE "factors and many more will
condition student life in the 1970's and beyond.
Decisions affecting them should be given a "general
direction" in the same way that the Comprehensive
Campus Plan guides the school's physical ex
pansion. Developing such a comprehensive plan would
not be an easy task. It would require tremendous
organization, diligence and ingenuity. But the effort
would be repaid in full if the result were a
University which kept abreast with the future.
DAILY NEBRASKAN
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Editorial Staff
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