E-Biz Isn't Getting a Free Ride on Taxes

Mike France is wide of the mark in ``A Web sales tax: Not if, but when'' (Legal Affairs, June 21) when he claims state and local officials have been willing to let tax collection slide and that online marketers are getting a free ride.

The reality is that retail, catalog, and Internet merchants are now treated the same: Where they have a physical presence or ''nexus,'' they collect from customers. Web merchants do collect taxes now in places where they have such facilities--and they are collecting such taxes from online customers in those jurisdictions. The Internet tax moratorium has not halted such collections.

Courts have backed direct marketers on two grounds: First, that it's taxation without representation where a merchant has no physical presence; and second, that cross-border tax collection is an interstate commerce issue that only Congress can regulate.

Courts also have rejected the states' creative theories that using 800 numbers, having money-back guarantees, and exhibiting at trade shows for short periods of time create situations where catalogers are liable for tax collection.

So far, there has been no successful effort by states and localities to simplify tax codes for any businesses that might be willing to collect and remit based on a streamlined format. Tax harmony remains an elusive goal.

We wholeheartedly agree that, for Internet-based commerce and perhaps on all types of commerce, a forward-looking tax policy is needed for the 21st century, and not one based on Depression-era thinking that has propelled the proliferation of regressive sales taxes.

Roscoe Starek
Direct Marketing Assn.
Washington

Hey, You've Got the Wrong Guys

''Stock options bite back'' (News: Analysis & Commentary, June 14) stated that West Group is being sued. It is not. West Group is a new organization created by the purchase of West Publishing by Thomson Corp. in 1996. The lawsuit and allegations mentioned in the article are against West Publishing, not West Group.

Both the plaintiffs and the judge have acknowledged that the actions of West Group and its management are not in question.

Steven A. Moll
Associate General Counsel
Thomson Corp.
Stamford, Conn.

Is America the Most Venal Nation?

In your listing of the most corrupt nations (''The list,'' Up Front, June 14), the scoring system that you employed obviously does not take into account the special-interest lobbying process--and its corrupting influence on election campaigning and the practice of governance--that exists in this country. If these billions of dollars spend on lobbying and campaign were included, that would catapult the U.S. into the No.1 position as the most corrupt nation in the world.

Chandran Cheriyan
Saratoga, Calif.

An Odd Quote about Asians

As a young Asian American and as an educated human being, I have a complaint about the article ''Are music companies blinded by fright?'' (Entertainment, June 28). The complaint arises from the following quote: ''A song stored on a floppy disk may not be playable on any other device except the one on which it was originally recorded. That's likely to chafe 'the average American, and more so the average Asian, who thinks it's a God-given right to copy something,' says Richard Doherty, director of research at the Envisioneering Group, a testing-and-research firm in Seaford, N.Y.'' Now, why do you think ''the average Asian'' would be more likely to be ''chafed'' than the average American?

Edward Lee
New York

The U.S. May Have ''The Wrong Defense and Too Much of It''

''The Pentagon's badly aimed billions'' (Editorials, June 28) was right on target. You properly focused on the new aircraft that are being designed to replace those that worked so effectively in Kosovo. There are, however, many new weapons in the Defense budget designed to replace others that were never even considered for use in Kosovo. Most notable among these is the new attack submarine.

Submarines are stealthy craft that were originally designed to be used against powerful enemies. Not surprisingly, the attack submarine force of the U.S. Navy has not fired a torpedo in anger since World War II. Certainly submarines were excellent intelligence-gathering platforms during the cold war, but they were not used much in Korea, Vietnam, Grenada, Panama, Iraq, Somalia, Bosnia, or Kosovo. True, attack submarines did shoot cruise missiles during the gulf war as a demonstration. Because Iraq had no navy to speak of, however, any ship could have fired those missiles.

Our current attack submarines are superior to any in the world and will be so for at least another decade. Most of these ships are about halfway through their intended service life. Some of these modern submarines, however, are being decommissioned early in order to get the total number down to an imposed limit of 45 to 55 submarines. Others will be destroyed early to make room for the new class of submarines. The first new attack submarine will cost about $3 billion. Follow-on ships will cost about $1.5 billion.

This current practice of destroying militarily superior submarines early in their service lifetimes in order to make room for more expensive submarines that will have no apparent rivals for at least a decade can only be classified as madness.

James T. Bush
Captain, U.S. Navy (Ret.)
Arlington, Va.

Since the end of the cold war, some of the finest public servants from two Administrations have failed to come to grips with the problem of an oversized budget that is buying us the wrong defense and too much of it. Good men and women, in and out of uniform, have averted their eyes because the political problem is tough, and neither Congress nor the Clinton Administration has the stomach for a fight. Last winter, Army Times bannered the story of spare parts shortages that dropped the forces' mission-capable rates for Air Force planes to 74%, down 10% in five years. Planes are parked in hangars all over the world because they've been cannibalized for parts.

If the Pentagon were a business, the CEO would have called his team together 10 years ago and said : ''Folks, the market has changed. There's no more Soviet Union. I want you to cut your budgets 15% because I need the money for a new market--our many domestic problems. If you can't find the cuts, let me know, and I'll get a new team.''

Until your editorial, nobody in the national press had noticed.

James S. Doyle
Bethesda, Md.

Editor's note: The writer retired in 1998 as vice-president and executive editor of Army Times, Navy Times, Marine Corps Times, and Air Force Times.

Congratulations to BUSINESS WEEK for reporting the Pentagon's dirty little secret: The war over Kosovo is evidence of an incredible $300 billion misallocation of assets.

You are so right: The old A-6 Intruders, which the Navy scrapped (because faster is better), were badly needed. Their absence prolonged hostilities.

But it's worse than that. The Navy is still ordering billions in cold war submarines, mega-warships, and mega-aircraft, and spending itself into a weaker position. The Army and Air Force are doing the same.

At a time when proven domestic needs are underfunded or not funded at all, the Pentagon is still sucking up more than half the annual discretionary budget on a wide range of weapons we don't need.

John J. Shanahan
Vice-Admiral, U.S. Navy (Ret.)
Chairman, Business Leaders
of Sensible Priorities
Ormond Beach, Fla.

Skilled Workers: The Search Should Begin at Home

Laura D'Andrea Tyson is right, of course, to point out the growing need for skilled workers in technology, even after we solve the Y2K problem (''Open the gates wide to high-skill immigrants,'' Economic Viewpoint, July 5). She may also be right in urging that we import such high-skill competence in information technology.

Let us not overlook the possibility, however, that we can educate enough of our own children, and reeducate enough of our adults, to fill this need. We are about to have a window of opportunity to seek out the brightest young people as we satisfy the need for workers for the Y2K problem. We need to ask ourselves the question--a hard one--as to what would happen if we allocated the necessary resources to raise the educational levels of the young people whose talents are now going to waste.

Experience makes clear that the effort to improve education would be expensive. The expense, however, can have a double result. We would not only produce the human skills we need to run a contemporary technological society but would also improve the quality of elementary and secondary schools, and even community colleges and universities. That, in turn, would rebuild confidence that our public school system can help young people learn what they need to know and help adults to learn anew what they didn't have a chance to learn when they were younger.

Some private businesses might also develop their own training programs. If we begin to look at our own citizens, their needs, and their possibilities, we could then take a second look at the need to import high-tech workers.

Leonard S. Stein
Evanston, Ill.

Laura Tyson provided a solid argument in favor of increasing the H1-B visas for highly skilled immigrants. However, there is an issue that needs mentioning--the shortage of Americans studying information technology in college. This is a major concern for domestic employers, who must fill openpositions with highly skilled immigrants. These immigrants often find that the United States offers something that their host countries do not: higher wages. The greater the income disparity in the host country, the greater the probability that the highly skilled individual will emigrate to a country that will offer him or her a higher wage.

Andy Seth
Torrance, Calif.

One U.N. Agency's High Standards of Transparency

We would welcome an opportunity to discuss the issues that were mentioned in ''The Net: How to head off big-time regulation'' (Legal Affairs, May 10). The World Intellectual Property Organization (WIPO) is one of the U.N.'s 16 specialized agencies. It is not, as the article says, a ''quasi-governmental group.''

As for the conduct of the WIPO process on Internet domain names and their relationship to trademarks, this was initiated with the approval of WIPO's 171 member states. Each step of the process has been transparent, and WIPO has gone to great lengths to make participation possible by all interested parties, including governments, nongovernmental organizations, public-interest groups, and the private sector. WIPO also posted requests for comments on the Internet and received more than 1,000 reactions from governments, intergovernmental organizations, professional associations, corporations, academics, and individuals.

Geoffrey Yu
Assistant Director General, WIPO
Geneva

Assisted Living Fills the Bill for Many Elderly People

There is a simple explanation for the ''puzzling slowdown in nursing home demand'' (''Who's caring for the aged?'' Economic Trends, June 28). And it is not because elderly people are healthier nowadays. The reason is the realization, which was made several years ago, that many of the elderly need only a small amount of assistance or care. They do not need the comprehensive institutional care that a nursing home provides.

This new awareness has led to building more ''assisted living'' facilities tailored to the needs of elderly folks still in fair health but needing only some oversight and assistance with meals and social routines, and wanting to live in a home-type environment.

A.F. Kaulakis
Rye, N.Y.

''Saturday night at the holographs?'' (Developments to Watch, June 28)

In ''Saturday night at the holographs?'' (Developments to Watch, June 28) azobenzene was described incorrectly. It is an industrial chemical, not a type of polyester.