One other debt we owe the rich (if you will permit the expression) is that they provide the necessary first market for new products -- indoor bathtubs, television, computers -- so that manufacturers can make more at lower prices. Before too long, we all have these things.
Elizabeth Mudge Mann
New London, N.H.
Why is it never pointed out that the corporation exists as a separate entity and as such protects the investor from a loss greater than the initial investment? That is the reason for the supposed double tax. If dividends were to pass through and not be taxed at the corporate level, in effect you have a partnership and all partners (shareholders) should be held personally responsible for all losses.
You should not be able to have it both ways. Already, taxes are evaded because companies hoard cash instead of declaring dividends, allowing individual shareholders to pay lower taxes by taxing capital gains on a sale of stock shares rather than paying tax on a dividend. The same profit from ownership is realized either way, but not the same tax.
Your list of proposed changes in the tax code if President George W. Bush were reelected conspicuously omits an old Republican gleam in the eye -- i.e., to end the deductibility of state income taxes from the federal tax. When Senator Robert Packwood (R-Ore.) helped the Reagan tax cuts through the Senate, he wanted to end all state tax deductions but had to settle for ending it only for sales taxes. It was duly noted at the time that anything more would devastate state and local sales taxes. Actually, there was once a major country that combined a small income tax with a large consumption tax: It was the Soviet Union, which is hardly the sort of role model one expects from the GOP and its acolytes among economists.
John E. Ullmann
Hempstead, N.Y. Re "America's stark fiscal choice" (Editorials, Sept. 20, and "The national piggy bank is going hungry," Business Outlook, Sept. 20): My suggestion, short of a flat tax, is a universal "cost of government" (COG) tax of 1% that is assessed on income before any deductions or credits. Ten dollars per thousand (or six-tenths of a minute per working hour) of income is not a sacrifice, even at the minimum wage. That's enough to pay for the "war on terror" in total.
Allen T. Hyde
Newland, N.C. In "Meet the friendly corporate raiders" (Finance, Sept. 20) on activist fund Relational Investors LLC, Chris Palmeri says the California Public Employees' Retirement System (CalPERS) gave Relational its seed money but has had "mixed" results with investments in its other corporate governance funds. In fact, four out of the six corporate governance funds that CalPERS invests in beat their benchmark. Last fiscal year, the funds in total earned a 53% return for our beneficiaries. I would hardly call this mixed.
Patricia K. Macht
CalPERS Office of Public Affairs
SacramentoEditor's Note: BusinessWeek based its characterization on the data available to us at press time. It showed that three of the six funds did not beat their benchmarks since inception. Re Emily Thornton's article "Fed up -- and fighting back" (Finance, Sept. 20) on women working to end discrimination on Wall Street: The 80-some Merrill Lynch (MER
) women I interviewed were assured that I would hold everything they said in strictest confidence. They knew their observations and recommendations would be submitted to the firm in a way that would not allow identification of any individual woman or the branch where she worked. Only when a woman explicitly gave permission, and it would shed light on the group's recommendations, were the specifics of her experiences and views passed on to the firm. I am proud of the Merrill Lynch women who participated and of the work we did together during the year-and-a-half project.
When I undertook my case, I did so in part to test a process set up by Merrill Lynch, class counsel, and the lead plaintiffs in Cremin et al v. Merrill Lynch. There was a tremendous risk for me in going through a public trial, and it took an incredibly long time to get to trial. Many women are still in the process, and there are many women whose bravery allowed me to take my case to a level where it could be publicly documented.
San Antonio "A prescription for health-care reform" (Economic Viewpoint, Sept. 20) missed a critical point: Glenn Hubbard indicates that a higher deduct ible and co-insurance will reduce utilization, resulting in a net spending decline of $65 billion per year. If patients avoid seeing their physician until their condition has turned catastrophic, over the long term, the cost could dwarf the $65 billion in savings achieved in the short run.
Larchmont, N.Y. "Lessons of the Hollinger chronicles" warns against the dangers of a CEO holding a controlling stake (News: Analysis & Commentary, Sept. 13). The "one man, one vote" rule seems to work well in politics. Let's have a "one stock, one vote" rule passed into law by Congress. Multiple tiers of stocks should be done away with. It should be illegal for insiders to arrange special deals that give themselves a greater portion of voting power than they really deserve.
New York It's time for the International Olympic Committee to consider awarding two consecutive Olympics to the same city ("A big fat Greek triumph," Sports Biz, Sept. 13). This will reduce the escalating risks of building infrastructure and providing security. Otherwise, smaller countries such as Greece will be priced out. A second pass for Greece would be an incredible boost for their economy and help retire their debt. And what's sacred about four years? How about a summer Olympics every three years?
Portland, Ore. David Welch's commentary "Detroit is over a ($50) barrel" (The Corporation, Sept. 13) had that strange feeling of "déjà vu all over again." Those of us who remember the oil shortages of the '70s remember that Detroit was not ready then either. The arguments were made that Detroit needed time to adapt to fight the invasion of European and Japanese cars, which were more fuel efficient. Now we find that in the past decade, Detroit has essentially given up on the car market, underinvested in fuel efficiency, and once again finds itself struggling against the Japanese and Europeans with their more fuel-efficient vehicles.
Cheap gasoline has been a curse disguised as a blessing for the U.S. automobile industry and the nation as a whole. Perhaps a gasoline tax that keeps prices high will reduce demand, spur innovation, and set the nation on a path toward more sustainable energy consumption levels.
New Providence, N.J.