Monday, December 26, 1966

Tax Study Overdue On Foundations

Rep. Wright Patman of Texas has raised an interesting point concerning tax exempted foundations.

He believes that for many of them profit and comfort, not charity' have been the main business. Thus Rep. Patman has called on Congress to tighter the tax exempt requirements for such institutions.

According to Patman, foundations received $4.6 billion over the period from 1961 to 1964, but less than half was disbursed to the various causes served. Nearly $500 million went for expenses.

Patman, reporting for a subcommittee, said one foundation had expenses almo.st equalling its income; anothers sole purpose was to recruit football players: still another paid $18,000 a year to the V ife of the man in whose name it was founded.

Foundation funds have played a gi'eat role in

1

,iections i op Year Of News

By WILLIAM A. SHIRES RALEIGH - When voters turned out in heavy numbers and handed Republican candidates many surprising upset victories in the Nov. 8 general elections it became the big-?est state news story of 1966 n North Carolina.

This is the consensus although not unanimous opinion of editors and news editors of the 32 member newspapers of the N. C. Association of Afternoon Dailies, according to a pre Christmas survey.

Politics definitely was big news in the state during the year. It figured prominently in ttie editors choices of the biggest North Carolina news stories of the year on ballots from all parts of the state.

WILLIAM

SHIRES

With widespread Republican gains from Congress to t h e courthouses leading the list, more than half of the top 10 stories chosen concerned poli tics in one way or another.

Biggest Story The biggest story in the edito s opinion occurred when the GOP made a stunning ccmeback in statewide votng. scoring its biggest political-gains in North Carolina in nearly 40 years.

E>ozens of veteran Democrat^ in public office tumbled. A Republican candidate, Jim Gardner, unseated the dean of the plates congressional delegation, Rep. Harold D. Cooley.

In some counties. Republicans swept every office they contested. The GOP loubled its former strength in the state legislature.

This surprising story wa.s placed among the top 10 on every list received in the survey.

Brown Bagging is Big Second on the list was a story the states brown bagging controversy which after smouldering most of the year burst into banner headlines during the past few weeks.

The widespread custom of

brown bagging, consuming legal liquor outside of private homes, was declared illegal by the state Supreme Court and immediate enforcement was ordered.

Legislative action to clarify the states liquor control laws was considered likely earlv in 1967. Until then, however, many restaurants, hotels, supper clubs, country clubs and bottle clubs and their employes faced severe financial bosses. Some said they would have to close.

Tax Cot Promised

Still another late - breaking story ranked high, in third place, on the list. This was Gov. Dan K. Moores announcement that in view of an anticipated $150 million general fund surplus and his own 1964 campaign promise he will recommend a broad and general tax cut to the 1967 General Assembly.

The governor gave no dc-taiKs nor specifics about what his tax cut recommendations might be. But the announcement and resulting speculation was enough to arouse much interest. And this was high and intense.

Political reapportionment of the states Congressional dis tricts and both houess of the legislature was done during a special session of the General Assembly last winter, under a federal court order. It was history - making insofar as North Carolinas political lines were drawn but the courts said it was not entirely satisfactory under the one man-one vote principle and would have to be done again in 1967.

Other Top Stories

Fifth on the list according to the consensus was the continuing story of the bid bv East Carolina College for independent university status, a question to be decided ultimately by the legislature.

Next was the surprise and still unexplained firing of Walter Anders(Mi a few weeks ago as director of the State Bu reau of Investigation. Anderson was fired by Atty. Gen. T. Wade Bruton who declined to make public his reasons for the action.

Economic trends in North Carolina, rangling from a tight money situation, the growth of a substantial surplus in the state treasury, (Continued On Page 5)

The Daily Reflector

fNCORPORATED

Established 1882

Published Monday Through Friday Afternoons and Sunday Morning

DAVID JULIAN WHICHARD, Chairman of the Board

JOHN S. WHICHARD-DAVID J. WHICHARD

Publishers

Entered at Post Office, Oret;nvlllc, N O. as second class mall matter

#

SUBSCRIPTION RATES Home Oelivvry by Carrier or Motor Routo Weok 40c By Mail, Payablo in Advanco

One Year .......................................

Six Months ........................................

rbree Months .....................................

One Month .......................................

^ Price* tnclud'* s?le^ rax where appUcahle)

$1800

0.50

$.00

$.00

MKMBEB ASSOCIATED PRESS

TBo AAPAOisted PrM to exclusively enutied to use for publl-cfUon All otwa dispatches credited to It or nt otherwuc crodlted to thia paper and also the local news publi.^hed herem. All rights of publications of special dispatches here arc also reserved.

the development of America. Many fortunes founded during the nations early growth period have since been turned to the betterment of the population. In many cases foundation funds have iRJed needs which otherwise wiuld have had to be tak^n care of by an ever growing government ... or not at all.

Still a tax exemption is granted only when an organization is non-profit. Foundations which allow their funds to pile up or divert funds to outlandish expenses should not be considered for this favorable treatment.

Foundations are, of course, private organizations; but when they are granted tax exemptions on their earnings then every tax payer has a right to know that the funds are not being hoarded or squandered.

When Congress convenes next month prompt action should be taken to study this entire que.stion of tax exemption for foundations. There should be no restrictions on those foundations which are proceeding properly. On the other hand tax exempt status must not be used to flout the tax laws.

Men On The Move Are Anxious To Get Going

There is a striking parallel between the parting of the ways that appears in the making between Gov. Moore and J. W. (Willie) York and the political parting between the governor and Malcolm Seawell eariler this year.

Although the difference of opinions has come about on entirely different subjects, the underlying factors have striking similarity.

Gov. Moore and his chairman of the Board of Conservation and Development are parting over a difference of opinion on the states legal interest rate. Gov. Moore is commited to oppose an increase in the legal limit of six per cent. York has been open in his assertions that the state should increase its legal interest rate in order to attract more money to North Carolina on a competitive basis with surrounding states

It seems clear that the two men are at odds because York wants the state to move to meet a situation which he thinks poses a serious threat to North Carolina and its future. Gov. Moore, on the other hand, appears anxious to sit tight.

Basically, this was the reason that Gov. Moore and Malcolm Seawell parted political company earlier this year. Seawell felt the state should move with vigor against the Ku Klux Klan because it posed a threat to the state, its citizens and its future. Gov. Moore chose a policy of passiveness rather than action.

Both Seawell and York were strong Moore supporters during the latters campaign for office. They were key men in the formation of the Moore administration. Seawell chose to sever his connection with the Moore administration and York has made it clear he has had the same attitude.

Perhaps both instances are cases of men on the move being able to stay just so long as part of an administration which is not.

3uilt-In Rise

Nineteen Hiindrec. Sixfy-Six ^ eai*s i>aler am?

By ART BUCHWALD

Thinas Arent The Same

WASHINGTON - If p o o r CJharles Dickens lived today he would have one heck of a time writing A Christmas Carol. Things just arent the same as they were in those days and Dickens would be hard put to make his plot believable.

There wouldnt even be a Bob Oatchit in the story because he would have been replaced by a computer long ago.

But lets, for arguments sake, aay there was. When Scrooge at the beginning of the story says to his clerk, Youll want tomorrow off, I suppose? Cratchit would reply, Not only tomorrow, but Monday. The union says if Christmas falls on a week end we get Monday off as well Also Ive worked late tonight so I get double time.

A poor excuse for picking a mans pocket ever>' 15th of December, Scrooge says.

ror laxpayers

Other Editors Saying Not For North Carolina

BUCHWALD

UNITED PRESS INTERNATIONAL

Advertising rates and deadlines available upcfi request ^ember Audit Bureau of Clrculatiou.

By JOSEPH R. COYNE

Associated Press Writer

WASHINGTON (AP)-Your taxes will increase on New Year's Day regardless of the decision President Johnson ultimately reaches on the Vietnam war.

Its a built-in rise in social security levies which Treasury Department officials estimate will draw an additional $1 billion into the social security trust funds during 1967.

The most anyone will have to pay, however, is $13.20 additional over the year.

The extra money will help pay for the increased retirement, disability, health care for the elderly and other benefits voted by Congress.

The increase will amount to two-tenths of one per cent on both the employe and the employer, less than half the actual increase in rates which went into effect last New Years Day.

Increases in social security faxes are already built into the law through 1987.

These step ups go even higher because President Johnson has already announced h will seek increased social security benefits from Congress next year. Increased benefits could mean increased taxes although the President has not yet indicated whether he would ask that the increase be financed from social security taxes or from general funds. Republican leaders also favor an increase in benefit payments.

The increase in social security taxes is only one of seven changes in the tax law which goes into effect New Years Day.

Two of them, approved by Congress in 1965, change for some taxpayers the method for computing medical deduc-tioqs while the others, adopted this year, dont change the amount of taxes to be paid but spell out in greater detail how and when they should be paid.

In one important change taxpayers who claim a substantial amount of deductions and who normally receive a largo refund will be permit! ti) Likfi a "withholdinu allow

ance and thus reduce the amount of tax withheld from their paychecks each payday.

This is simply a device to bring a persons withholding more in line with the actual tax he must pay.

Forms and instructions for claifning the $700 allowance -similar to the $600 exemption permitted for dependents have already been sent to employers by the Internal Revenue Service.

This doesnt mean that a person can reduce his actual tax by $700. It simply means that tax will be withheld from his paycheck on $700 less income a year.

But the tax law change that will affect the most pocket-books is the increase in social security taxes.

During 1967, the base on which this tax will be paid remains the same-the first $6,600 in earnings. A change in the base last year from $4,800 to $6,600 was responsible for much of the extra tax paid during 1966.

Next year's tax rate will be 4.4 per cent for both employe and employer Instead of 4.2 per cent this year.

This will mean the maxium payment will increase from this years $277.20 to $290.40 for each worker earning $6,600 and his employer.

Opiniona

In Brie:'

Genius at assembling thingseven with instructions on the boxis not standard equipment of Fathers. And for those with two left bands and ten thumbs, it is in order to mention that that night is just around the corner. Nashville (Tenn.) Banner.

(Ci^ldsboro News Argus)

We have liked the looks of Nelson Hyde as senator from Buncombe Ck)unty. We measured him to be a man with plenty of savvy and a personable public servant with more than average ability, understanding and purpose.

But we find ourselves in disagreement with the Asheville man as to a recent suggestion Raleigh reports say he made.

Sen. Hyde said that professional members of the General Assembly might be in line. The day of the farmer who goes to the Legislature or the lawyer who goes to the Legislature, o- the business man' that day is on the way out, the Raleigh reports quote Mr. Hyde as saying.

The legislators of another day will be professional legislators. They will do nothing but serve in the General .Assembly. They will be paid a sufficient salary to warrant their giging all of their time to their job of law maki-ng. So Sen. Hyde is quoted as saying. '

(He did not mention a sug

gested salary for legislators but in New York the pay of

a legislator is $30,000 a year.) And so far as we 'an tell from where we sit legislators in New York offer no greater service than the North Carolina variety who continues operating his profession or business while ser

ving in the General Assembly.

The Buncombe legislat o r even envisions the time when the General Assembly of North Carolina will be in sess i o n each year. That would do

more harm than good It would keep us all stirred up, uncertain and paying so much attention to what was going on in Raleigh that we would neglect our own affairs.

If we elected to establish we would get exactly that. Our law makers would be

law makers because the job offered a good living. And men would be picked on the basis of the best campaign

er rather than the man of greatest ability.

North Carolina is better served by a legislator who is more or less drafted for the service he can render, n o t because here is a cushy job.

And one more thing, Scrooge. Dont come around tomorrow to our house with one of those crummy turkeys the butcher couldnt get rid of. If you want to give us something, what wed really like is a color television set.

Scrooge slams the door and goes home cursing Christmas and the unions.

ART

He finally settles down by the fire and tunes in Lawrence Wclk on the TV. But during the commercial break the ghost of his partner Marley appears with all sorts of chains, locks, padlocks and cash boxes wound around him. At first Scrooge thinks it's a commercial for a new headache powder, but then Scrooge shouts, I know him! Marleys ghost.

Well, who did you expect to see? Marley says. Sandy Koufax?

Marley tells Scrooge that the only way he can get rid of his anxieties about Christmas is to take LSD. If Marley had taken it, he says, he wouldnt be shackled right now. Marley gives Scrooge a cube of sugar and disappears.

After swallowing it, a ghost appears and says, Daddio, youre going on a trip way back into your childhood. You better not flip or you wont come back.

The ghost takes Scrooge back through his childhood which was pretty miserable, but no worse or no oetter than anybody elses. Scrooge (Continued On Page 5)

Country

By ROWLAND EVANS AND ROBERT NOVAK

GUATEMALA CITY - A greater threat to Guatemala s fragile democracy than highly publicized Communist terrorism are two ominous though unpublicized statistics whose political repercussions next year could topple the democratic left regime here.

The first one reveals a panicky flight of capital by Guatemalan businessmen more worried about the government's social reforms than Red guerrillas. Reliable banking circles privately estimate that Guatemalans this year have shipped $20 million into the safety of foreign bank vaults, more than double last years flow.

The second statistic kept secret by the government reveals a sharp decline to $J5 million in foreign private investment here for 1966$7 million less than 1965.

Add to this a poor year for Guatemalas chief exports (coffee and cotton) and a sever# shortage of foreign exchange looms. Businessmen here universally expect this to trigger a sharp economic recession which surely will heighten pressures from the conservative oligarchy for an army coup on the pretext that the civilian government has failed to exterminate the guerillas, 50-50 CHANCE OF SURVIVAL

Even the most optimistic friends of President Julio Cesar Mendez Montenegros six-month-old government give it hardly better than a 50-50 chance to survive in a nation whose habitual form of government has been military dictatorship. Embryonic democratic instutitions are vulnerable to the com b i n e d threats of C2>mmunist insurrection, economic recession and a hostile oligarchy.

But this would not be just another banana republic coup. Ihe fall of Mendez government could propide a major supply of recruits for Communist insurrectionaries from th# ranks of milillusioned democratic leftists.

Mendez faces the classic dilemma plaguing Latin American social reform. His reforms are intended to preclude Communist gains among both restive mixed-blood Ladinos and still apathetic Indians living outside the money economy (comprising 55 per cent of Gautemalas 4.5 million inhabitants. Yet these reforms 80 antagonize the oligarchy that Mendez regime if threatened. This was shown by the oligarchys hysterical reaction to the governments relatively mild tax reform proposal for a graduated tax on land designed to raise revenue and also promote investment away from the land.

So intense was the opposition that Mendez retreated to a compromise tax package including a whopping 50 per cent increase in the regressive sales tax further diminishing scanty purchasing power by the Guatemalan masses in the face of possible recession

OUGARCHY WANTS NO TAXES

In hindsight it might be said that higher income taxes would have been preferable to raising property taxes. But in truth the Guatemalan oligarchy want no tares at all, as evidenced by flagrant tax evasion. Apart from evasion, current tax rates are shamefully low: .06 per cent on property and for an average businessman an effective rate of around 1 per cent on income.

These people cant understand, Finance Minister Al-(Continued On Page 8)

Almost Certain Seasonal Record

It might seem like an innovation, but actually the trick of offering an employe a valuable prize if he doesnt goof off and skip work is an ancient ploy. In fact, there was a time when the prize at stake was a paycheck.Dallas (Tex.) Morning News.

By ELMER ROESSNER

When the last Christmas sale is totted 1Q>, it is still almost certain that another new record has been set

It is true that sales have been less than expected because of enclement weather and consumer uneasiness. It is true that unsold inventories will probably set another record high. Nevertheless, it is fairly sure that total sales for the Thanksgiving-to-Christmas season, and-or for the rponth of December, will top last years marks.

A more narrow question is whether the gains over last year are more or less than tlie rise in prices. It may be that, in physical volume, no more goods were sold this Christmas season than last, and that the rise in the total was merely a measur#,^f higher prices.

On I the other hand, inerte

chants stuck with surplus merchandise made some sharp cuts in the week before Christmas (a $12,000 sable was cut to $9,999.98) and so price rises inflation may have been smaller factors than supposed.

ELMER

ROESSNER

THE CRACKED RECORD

Once again: there has been no development to change the estimate here thai the slowdown in auto sales dragged down total retail sales, or the prediction that because of high inventories, pos t-Christmas bargains will be more plenti

ful than in recent years.

One other factor that slowed down the sale of merchandise is that many people made gifts of bargain securities this season, including U. S. savings bonds, which are competitive bargains.

Another business future:

The fight for more consumer protection may fulminate next year. After a lot of political bombast early this year, bills for greater protection of drug buyers, money borrowers and shoppers generally faded into legislative limbo# la$t year.

President Johnsep bat been accused of sitting on the Consumers Report for six months, and releasing it after it was too late to get Congressional action.

There has been a change, h 0 w e V e r, The Republicans made notable gains in the la.st election. Johnson laces the

necessity of gaining tupport from the people. And one likely way will be to demand legislation to protect consumers.

This will also make palatable his forced appeal for higher taxes.

^n. William Proxmire (D., Wis.) has announced his intention of resuming the fight for a truth-in-lending bill. The 1968 bill was advanced by Sen. Paul H. Douglas (D., 111.) who was defeated. Sen. Warren Magnu-son (D., Wash.) wl also fight for legislation to protect consumer. 8#n. Philip D. Hart (D., Mich.) is expected to resume the fight for truth-in-packing legislation.

The Republicans will not be siie.nt on consumer issues. Many have gone on record favoring consumer legislation and even the conservatives are unwilling to allow the Democrats to assume the role of protectors of consumeri.