You can bank on it:
Baruch, Jeremiah
Washington report YOU CAN BANK ON IT TAX CHEATING KEPT EASY THE GOOD NEWS in Washington this past month is that constituents appear to be much more interested in legislation before Congress. The...
...This principle was operating in the National Automobile Dealer's Association fight against regulation of used car sales, and the American Medical Association's campaign to stop regulation of unfair practices by physicians...
...Nearly fifteen thousand kits were requested, and it is estimated that more than half of the nation's commercial banks were involved in the campaign...
...Bob Dole and Rep...
...Later on, a campaign committee can ask for a donation to keep our right-thinking rep in office...
...A total of 414 banking and savings institutions' political action committees have contributed in the past two years over $3 million to ninety percent of the members of the 98th Congress...
...After all, there were much weightier issues awaiting governmental action, including bailing out international bankers for bad overseas loans...
...Banks are able to lower or eliminate federal taxes through the use of tax-free bonds, investment tax credits, and depreciation (largely from leasing deals...
...Just the three major trade associations seeking repeal of withholding - the ABA, the U.S...
...will continue to postpone figuring out how its bills are going to be paid...
...In fact, the measure was a compliance vehicle, a provision to chip away at the estimated ten to fifteen percent of those who never manage to get around to paying taxes on interest earned...
...In keeping with Commonweal's usual summer schedule, only one issue will be published each month during July and August...
...The ABA estimated costs of implementing the withholding measure at $300,000 to $400,000 per institution...
...American banks successfully bought and fought their way against the withholding measure - but the nation's coffers will have $13.4 billion less in the next four years...
...The banking industry's efforts had a telling effect as hundreds of thousands of customers kept those postcards and letters coming...
...When they are told that the government is further intruding into their lives and costing the banks money, and thereby the depositors as well, citizens tend to believe what they hear...
...Somehow, Americans, virtually overnight, were convinced that the withholding provision was a new tax, and who wants to be in favor of new taxes...
...income of $154 million in 1981, got a refund or tax credit of $18 million - translating into a negative tax rate of 11.7 percent...
...And so much for congressional consternation over $200 billion deficits...
...A larger number simply marked off a pre-addressed postcard, as easy as a magazine subscription - until the bill comes due...
...When citizens are willing to spend time and money on an issue, members take notice...
...For example, in a recent study the Joint Committee on Taxation found that Bank of America, the nation's second largest, with U.S...
...This, as Bill Keller of the Dallas Times Herald has pointed out, leaves the common interest to be defined by the less public-spirited members, or the "lowest common denominator...
...Every member of the House and Senate was provided the names of thousands of their constituents who (1) had enough money to have savings accounts, and (2) in their letters often further identified their interests - senior citizen, widow, businessman, etc...
...The bad news in Washington this past month is that constituents appear to be much more interested in legislation before Congress...
...So much for a threatened presidential veto...
...it will be implemented only if the General Accounting Office finds that tax-cheating on interest and dividends has not been cut down substantially and both Houses affirm such findings...
...But an apparently unintended consequence of the banker's campaign also significantly aided their cause - that was the delivery to members of Congress of great lists of potential campaign contributors...
...Dan Rostenkowski...
...Thank the one thing everyone is always blasting - thank the system...
...As one advocate for the poor observed, if a provision to prevent fraud in food stamps was delayed for four years to see if the fraud rate had been reduced on its own, there would be an uproar of righteous indignation across the country...
...In fact, it may only be computers that are concerned...
...In the House, another close call, this one on May 17 by a vote of 382 to 41, came down for a straight repeal...
...But this time withholding was packaged into a much larger and much needed revenue measure that passed Congress last year with bipartisan support, and was sent to a highly receptive President Reagan...
...Here comes the American Bankers Association - the major bank lobby - with its membership comprising most of the nation's fourteen thousand banks...
...Thousands of letters, mailgrams, and postcards have been sputtering out of the computers of the nation's banks, via their customers, to Capitol Hill, where an equal number of letters have been spun out by House and Senate computers - in what has been described as the heaviest mail campaign ever to hit Congress...
...Banks won't be taking your taxes out of your account...
...The next issue will be dated July 15...
...Nonetheless, the American Banking Association (ABA) had compelling reasons to launch an attack on the withholding provision...
...The upcoming deficits will be that much larger...
...Most members did not vote for repeal or delay of the withholding provision just to acquire a valuable campaign hit list - but it certainly contributed to the overwhelming margin of victory, particularly in the House...
...Was this conversation between HAL and his pals fruitful...
...A lobbying principle can be seen working n the ABA, as in other associations, that is, they must skillfully seek out issues which will offend the least number of their members...
...counter-estimates by data processing firms offering systems to banks were placed at $40,000...
...Perhaps to help the deficits, the banks will again raise the specter of the welfare cheat to cut social programs - the tax cheat being too costly and cumbersome to pursue...
...History has shown that the banking industry had successfully beaten back earlier presidential initiatives (Kennedy in 1962, and, more recently, Carter in 1979) to collect taxes on interest and dividends upfront, just as is done with in wages...
...The Senate came up with the delay compromise rather than outright repeal, to save the president from having to follow through with his promise to veto any repeal attempt and thus risk being readily overridden by a Senate controlled by his own party...
...JEREMIAH BARUCHsystem...
...Association members could also send away for any number of printed, pre-addressed postcards for depositors to send to Congress...
...This is an inadvertent continuation of direct efforts made in the form of PAC money...
...if members do not, it is at their own electoral peril...
...Well, in a word, yes...
...Citizens have come to trust their local banks as pillars of the community and holders of their mortgages...
...A number of major banks, including Bank of America and Citicorp, were willing to let withholding go into effect in July rather than lobby to overturn the law and risk the wrath of Revenue Committee Chairmen Sen...
...Congress is quite sensitive to intensity of interests...
...All that was needed was for a member to reply to the concerned bank or savings-and-loan depositors that he or she had voted for repeal...
...The banks' computers are talking to the Hill's computers about the repeal of the scheduled July 1, 1983, ten percent withholding of taxes from dividends and interest payments...
...A practical consequence of the banks' lobbying has been to aid significantly the reelection campaigns of a number of members of Congress...
...and then to send a letter a little later reminding them of their representative's responsiveness and possibly identifying other legislation of potential concern to the depositors, now identified and categorized...
...But never you mind...
...The ABA offered members complimentary press kits equipped with posters for bank vestibules, and samples of press releases, speeches, advertisements, and sample letters from bankers and customers to congressmen and newspaper editors...
...On April 21, the Senate agreed to delay tax withholding, at least until 1987, by the slim margin of 91 to 5. (Rumors have it that the IBMs were jammed for the five that voted against the measure...
...The Senate delayed withholding until 1987...
...For those interested in mounting such a successful lobbying effort in the future, pay attention to the maneuvers used during this one...
...In addition, given the competition for the loyalty of smaller banks by the Independent Bankers Associations, the ABA saw an opportunity and seized it with zest...
...Well, the bill won't be due on July 1; the U.S...
...The measures that passed overwhelmingly in both chambers, despite being vigorously opposed by the House and Senate leadership, will add a cool $13.4 billion to the deficit through lost revenue...
...From 150,000 to 300,000 pieces of mail deluged each Senate office, and 12,000 to 25,000 each in the House...
...JEREMIAH BARUCH...
...moreover, many bankers would not risk retaliation in tax laws that they have found to be quite favorable...
...League of Savings Institutions, and the Credit Union National Association - together contributed more than $1 million to congressional candidates in 1981 and 1982...
...Trade associations periodically need to justify their existence (and dues) to their members - and a common enemy is a useful device...
...but don't thank your friendly local banker...
...Ironically, it is this same industry that will be the loudest to bemoan increasing deficits - particularly as the deficits' demands eat up more and more of the money available for investment and keep interest rates at a break-the-bank height...
...A large number of solicited bank customers wrote their own letters protesting withholding, even though the estimated loss of their interest was 54 cents for every $1,000 deposited...
...Rest easy, citizens of American...
...We are in a system where - to the extent that money talks, both directly in campaign aid and indirectly through sophisticated advertisements and computer-targeted solicitations - certain citizens can express their intensely held convictions with greater impact than others...
Vol. 110 • June 1983 • No. 12
