Masonry Magazine August 1986 Page. 18
WASHINGTON WIRE
But, with world competition still keen, pressure to cut costs remains great. Hence, the campaign to eliminate rigid and inefficient restraints on output.
The unions are resisting changes which could end jobs or cut incomes. So, labor and management are on a collision course that has already brought on a strike at AT&T, with other clashes likely before the current year is out.
Suppose the time should come when a tax increase becomes inevitable, and even the White House agrees to go along what form would it likely take? Higher income taxes would be the least promising candidate at a time when tax reform is lowering rates. But an oil import tax would receive serious study as an incentive to added conservation and aid for domestic producers.
A value-added tax (VAT) would also be a prospect, taxing the enhanced value that goes into a product at each stage. It curbs spending while boosting saving and investment.
The final shape of the tax-reform law that will emerge from Congress later in the summer is now discernible in the wake of the Senate's passage. The provisions that appear in both the House and Senate drafts will get by the joint-body conference pretty much intact, if history proves any guide. In the past, elements common to both chambers' bills have usually survived.
The Internal Revenue Service will go after tax cheaters with a plan for spending 12%% more over three years, increasing manpower 10% to 95,000. It will be one of the few Federal agencies to buck the cuts of Gramm-Rudman. IRS has discovered that computers can't replace people in sniffing out those who don't pay up all they owe. The beefed-up staff will audit more returns, look into more tax shelters, and cross-check information from many sources.
Cuts in the IRS budget of the past few years led to big snarls in processing, loss of revenue, and officials fear increases in cheating because of law enforcement.
The coming deficit cuts put a limit on how fast the economy can grow this year, in the belief of analysts in Washington and in business as well. The outlook is still for a little more growth than projected in late 1985. Consumer outlays (aided by the oil-price drop), home-building and investment in inventory by business will all be somewhat greater pluses than foreseen. But the smaller deficit now looming for the current fiscal year-let alone the sharp drop for the one starting Oct. 1-means diminishing fiscal boosts. And lower commercial construction will offset the strength in home-building.
Washington can see bad news-as well as good-in the oil-price drop. The good is clear: More money for consumers to spend on other things-like a tax cut. On the bad side, though, there is a potential chain-reaction of defaults on loans American banks made to third-world countries. Also, more sharp declines in the dollar as nervous foreign investors yank funds home. Imports would cost more competing U.S. items, too-meaning more inflation. And interest rates might well surge with an economic slowdown following. Deficit cuts and easier money could yet neutralize the oil-decline impact.
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18 MASONRY-JULY/AUGUST, 1986
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