Masonry Magazine October 1986 Page. 37
WASHINGTON WIRE
continued
TAX-REFORM'S CORPORATE TAX HIKES will mean big changes in the economy. Precise effects of the broad revision of the tax code are hard to predict-but the program represents some fundamental changes in governmental policy. The revision marks a major retreat from using taxes for economic engineering. It cuts back many of the tax credits and deductions riddling the tax code. And it reduces tax rates so sharply that remaining breaks lose their allure.
Tax reform reverses a 20-year slide in corporate tax revenues to the government and will reduce the code's traditional tilt in favor of capital-intensive areas.
THE PACKAGE IS EXPECTED TO CUT borrowing by consumers and business. Tax deductions are eliminated for most types of consumer interest payments. Corporate interest-payment deductions are made less valuable by lower rates. But this will lower the heavy debt burdens of individuals and corporations. Some economists see savings declining because of the limitations on IRA's, as well as from the ending of the tax benefits on long-term capital gains.
None of the effects are clear or certain. It's a confusing package, with many new provisions. They create a turmoil of cross-currents that will require a lot of time to sort out.
GASOLINE PRICES will soon be on the rise as OPEC cuts back output. Oil experts believe the price boost could be as much as 20 cents a gallon. That would take the price of unleaded gasoline back up above $1 a gallon. This would still leave prices far below the level at the start of the year. The 20% curb on production by oil-exporting countries began on September 1. The critical question is: Can OPEC make the cut-back in production stick? Most analysts think the agreement will hold up for at least a month or so. After that, politics and economic differences inside OPEC could weaken it.
If it holds, the pact could spark a modest recovery in U.S. output, or at least halt the cuts in drilling and production.
THE FEDERAL GOVERNMENT is mandating health benefits from business in a new law applying to firms with 20 employees offering health coverage. They will be required to continue coverage for up to three years to widows, divorced spouses, and dependents. For employees who quit or are laid off, the health-insurance coverage must be offered to them for up to 18 months.
BENEFICIARIES MUST PAY the premium, plus 2% for administrative costs. But employers are finding meeting the requirements a logistical nightmare. One of the problems is simply trying to keep track of all former employees. Another is the prospect of unhealthy workers seeking coverage from firms. Some think the law could raise costs of health benefits by as much as 20%.
MINORITY HIRING GOALS may be reimposed on companies that discriminate, the Equal Employment Opportunity Commission has decided after a court ruling. The Supreme Court recently upheld such goals as remedies for discrimination. The EEOC abandoned the use of minority hiring goals and timetables last fall, backing the Reagan Administration view that they amounted to illegal quotas.
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MASONRY-SEPTEMBER/OCTOBER, 1996 35