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10—THE CHRONICLE, Canton, & C„ December 12, INI More On City Finances At last week’s Clinton City Council meeting Auditor Bill Harris mention ed a subject which we h^ve touched on previously in these columns. In his audit report, he pointed out that the Municipal Dept, showed a deficit of about $33,600 and this was covered by transfer of Utility Dept, revenues. He said, “The Municipal Dept, is not operating on its own income. To support this department, there must be an increase in taxes or you must do something along that line so that the Municipal Dept, can quit grabbing from the Utility fund." There is more involved here than just the shuffling of funds to keep from raising taxes. The 'franchise for a municipality to operate its own util ity system is not irrevocable. If the Federal Power Commission finds that the city is not offering a satisfactory service at a fair price it can order that the utility franchise be sold to some other agency. For the past 19 years. City Council has held the line on property taxes and has used profits from the utility sys tem to cover the cost of growth. The city is fortunate to have its own utility GOOD SHOW, JAYCEES Bigger and better. That seems to be the Clinton Jaycees’ motto these days and their staging of last week’s Christmas Parade lived up to that de scription. The parade had more units than ever before. But the number of units doesn’t necessarily make a parade suc cessful. This one was well planned and organized. It had variety, color and conveyed some appropriate mes- ages of the season. For the youngsters, it was a de light. For the adults, the parade was enjoyable but the best show of the day was watching the anticipation, the awe and the excitement on the faces of the little ones. PASSION FOR PEACE The three tenets of the UN Charter which held the greatest appeal and ex tended the greatest hope to the free world were: “To maintain internation al peace and security . . suppression of acts of aggression . . . the principle of equal rights and self-determination of peoples." The record is that the UN has fail ed miserably in the first of these aims. And after 23 years, the UN has not been able even to define aggression; nor will it be able to do so as long as the Soviet Union holds a veto. On no less than 105 separate occasions, actions desired and desirable to the free world, were denied by use of the Soviet veto in the Security Council. Times with out number similar measures conso nant with the provisions of the Char ter were not even submitted because of the certainty of a Soviet veto. Self-determination of peoples went out the window early when the USSR voilated the promises made at Yalta and refused free elections in any of the States of Eastern Europe. When the USSR attacked Finland without cause in 1939, it was expelled from the League of Nations. No such action was suggested when the Soviets crush ed the uprising of the Hungarian Free dom Fighters twelve years ago. Nor has anything been done about the re cent rape of Czechoslovakia. But there are areas of the world where peace is precious to the UN. The General Assembly has just passed a resolution calling on Great Britain to use force to topple the Rhodesian government, headed by Ian Smith. And it has proposed extension of UN sanctions to Portugal and South Af rica. Calling upon Britain to use force against Rhodesia is a strange way of fostering “international peace and se curity.” Equally strange is the lang uage of the resolution which (and this is verbatim), “notes with appreciation the offers by Zambia and the Demo cratic Republic of the Congo to make available their territories and air space for this purpose ;”-r-the purpose being the implementation of force. The United States voted against the resolution, but it carried, 89 to 9. U Thant has been all wrought up over the Vietnam war, where Com munist aggression is being resisted. He wants that one stopped. But he can't wait to get at Rhodesia. His passion for peace really gets you, doesn't it? franchise and it is an extremely im portant source of revenue. A municipality operating its own utility system has the advantage of having a more diversified source of revenue than does a municipality which draws only from property taxes. Just about every home, whether occupant- owned or rented, uses utility services. Therefore, the city realizes revenue from residents who normally would pay little or no property taxes. However, we hope council does not jeopardize the siutation by looking upon utility revenues as a bottomless source of income. THE ONE THAT GOT AWAY Presbyterian College’s football program produced many post-season accolades. The team swept honors ranging from All-American (Dan Eck stein) to All-State (Hk&stein and Charlie Reid). Coach Cally Gault was named South Carolina “Coach of the Year” and Eckstein was the state’s “Player of the Year." In the face of all those and other honors, we hate to complain but we feel that Coach Gault deserved the Carolinas Conference “Coach of the Year” designation. It went to Coach Hanley Painter of Lenoir Rhyne. His Bears tied P.C. for the conference championship and Painter is, indeed, a fine coach. However, we feel that Coach Gault and his staff of Billy Tiller, Joe Nixon, and Herman Jackson did the outstand ing coaching job in the conference during the past year. P.C. did not have the depth that many other conference members had. The Bears were picked before the season to win the confer ence title and they got a share of it. P.C. was not picked at the top of the heap, but that’s where they wound up. Operating within the framework of tough entrance requirements and strong academic standards, P.C. built its team around some outstanding athletes mixed with others who might not have had the size for college foot ball but who operated on high-octane desire and determined know-how. Our congratulations to the P.C. staff and football players for a fine, enjoyable season. Wish I’d Said That & ^ “Many election years are leap years but candidates are more or less expected to look before they do it.”—Louis Nelson Bowman, Tri-County (Missouri) News. “Did you hear about the Medicare patient who had surgery? He woke up and found a placard on his in cision: ‘This is a Federal project showing your tax dol lar at work.’ ”—Tony Beebe, The Spencerville (Ohio) Journal-News. AGAIN THE RATS — “With $19 million worth of property destroyed and damaged, and with piles of rubbish and rub ble still left as a result of the riots and looting of last April, city officials of Washington, D. C., now demand $2 million from Congress for a war on rats,” said Rep. H. R. Gross (R.-Iowa). “The rat warriors want two dump trucks, to cost $16,000, and $3,700 for a bait-poison mixer, gas guns and rat tages. But every rat war must have a rat war headquarters, and so the request is made for $12,- 250 for office equipment and furniture. Then comes a re quest for $159,000 for educa tors and $411,000 for rat-con trol specialists." * * * The United States Air Force engineering team Is comprised of professionals. Ifyou’re an Astro- nautical Engineer and want un limited challenges, join the ranks of the professionals in Air Force blue. "The United States Wants To De-Americanize The War; The Toy Industry WELLESLEY HILLS, MASS.- Those who have lately ventured into downtown or suburban shop ping areas don’t need to be told that Christmas is fast approach ing. . .the crowds are tremend ous, the cash registers jingling! As usual, one of the prime be neficiaries of the Christmas buy ing spree will be the toy indus try, Among the toys which happy youngsters will discover under the Christmas tree this year will be such mind-boggling items as a workable computer and a do-it yourself electronic kit. Among the more prosaic gifts, such per ennial favorites as dolls, sleds, bicycles and wagons, cars and trucks, and games of all kinds. And, while Mom is picking up the wrappings and Dad is playing with Junior’s new model racing set or electric train, the toy in dustry will probably be adding up record volume figures in excess of $1,70 billion for the full year 1968 --a substantial gain over the $1.56 billion worth of toys and games manufactured in 1967, CHANGING Until the coming of television and the advent of the discount store, the toy business was pri marily a one-season affair with literally thousands of small com panies fighting for business. En trance was easy and failure fre quent. Television, however, changed all this. It enabled the toy manufacturers to reach the consumer (in this case, the child ren) directly, and using con sumer-oriented marketing and promotional techniques, it has helped stimulate year-round de mand for toys and games. The discount store also played its part by bringing down prices and broadening the market. Further more, at the same time these two forces were at work, the na tion’s disposable personal in come was rapidly rising and a greater percentage of this was being spent on toys. Thus, over the 11-year span through 1%8 (es timated) while disposable per sonal Income has risen 82%, toy sales have climbed 151%. During this period, the number of toy firms has declined from about 1,600 to 1,100. And, of the 1,100 presently operating, 12 com panies are now doing about 38% of the total business. PRICE CUTTING-A THING OF THE PAST? In the mid-1960’s, the toy in dustry went through a severe period of price cutting. Too much emphasis on volume, at the ex pense of profits, resulted in ser ious hardships for both manu facturers and retailers. Earnings declined, losses were incurred in some cases, and a number of the smaller firms were forced out of business. The lesson was a bit ter one, but it was not without its value. While price cutting has by no means been eliminated, the industry has adopted a moreYna- ture attitude toward the quest for volume, and it can be expected that sales will not generally be sought at the expense of profits. CURRENT OUTLOOK Despite government attempts to slow consumer spending, toy sales are booming along at a re cord pace this year, and the in dustry leaders should chalk tg some significant sales and earn ings gains. Based on prospects for even higher consumer afflu ence in the future and a great er proportion of income being spent on higher priced toys, the longer-term outlook is also bright. This is not to say there are no industry problems. An economic slowdown and a cut back in consumer spending would have an.adverse impact on the toy industry. The danger of product obsolescence, rising wage costs, and threats of foreign competi tion are also hazards that are part and parcel of the industry. Nevertheless, on balance, we feel that the investment oppor tunities outweigh the potential risks right now, and selected issues may be purchased by ag gressive, risk-oriented inves tors seeking capital apprecia tion. Favorites of the Babson’s Reports Staff at this time in clude Aurora Plastics Corp., leading manufacturer of model motoring sets and world's larg est producer of hobby kits; Mur ray Ohio Manufacturing Co., ma ker of a broad line of bicycles and Juvenile wheel goods; and Remco Industries, whose product mix has been broadened to include a wide range of games and toys, as well as craft sets and drums for the pre-teen market. THK MAN WHO CAME TO DINNER! TIME FOR DECISION The federal grant»-in-aid program for projects of nebulous need or value has grown beyond all rea son. Since World War II, the grants increased from $900 million in fiscal 1946 to about $20 bil lion now. In the 1964-66 period alone grant authorizations increased from 239 to 399, with an emphasis on urban projects, even though the tax dollars of course came from taxpayers in communities large and small. ( The outpouring of these tax funds has in some instances provided projects of value, but many of them have fallen far short of the planned objectives. The new Administration would do well to closely scrutinize these programs, eliminate unneeded ones and set priorities for those it retains. Farm Land Taxes Draw Discussion BY HAROLD ROGERS Assistant Extension Editor CLEMSON- They held a meet ing in Columbia recently to dis cuss the rising pressures of pro perty taxes on farm lands in the state -- and even those who or ganized the session were sur prised at the response. It drew a packed house of farm ers and farm leaders for the re ports and discussions of the many sides of the thorny issue. The problem, as outlined, comes in the increasing urbani zation of the state. The Consti tution calls for assessment of all property at true value. In prac tice, there’s a great deal of flexibility in this, but generally, rising subdivisions and expand ing industry have resulted in some higher property assess ments for agricultural lands, particularly in fringe areas. Those in agriculture say farm production won’t support the higher taxes. Figures from Clemson Uni versity agricultural economist Dr. W. J. Lanham support this. “Between 1950 and 1966,’’ he told the group, “real estate taxes al most doubled while net income for S.C. farmers went up 1 percent.” Across the board, property taxes represent the major tax paid by farmers, Dr. Lanham said. Farm Bureau president David lloan said. He said he knew of instances of property reassessment pro grams where evaluation of timber | property had been Increased 10 fold. “Sixteen states have faced up to the problem,” he added. “The time has come to make major changes in the property tax and its uses in S.C.” t Contributing causes of the pro blem were outlined by Marion Griffin, Spartanburg real estate appraiser and consultant. He cited encroachment of mod ern civilization through highly- developed transportation meth ods, increased mechanization of agriculture, industrial growth, inflation, land purchases, for speculative or investment pur poses, expansion of public utili ties, and the extension of credit Thomas F. Hady, with the USDA in Washington, told of some of the changes being made in other states, listing them in three broad categories: preferential assess ment plan; deferred taxation; and system of restrictive agree ments. One problem in any of the re form programs, he said, is in determining when land is being used for farming. “The Maryland law lists 29 criteria for deter mining this,” he said, “but it has not prevented considerable argument that the main bene fits are flowing to speculators.” A negative side of the picture was presented by Dr. Robert T. Collins, professor of economics and public finance at the Uni versity of South Carolina, who noted that with a-rising economy, demands for public service and revenue will increase. If exemptions are made in pre sent forms of taxation, he said, the burden will have to be shift ed to a new source. A second problem, he said, is in putting value on land when it is defined as farm land. One of those urging change was Rep. David Harwell, S.C. House member from Florence County. “You may have a desirable sit uation today and for many years to come,” he said, “but as soon is someone decides to challenge /our equity, the problem can be a traumatic experience." Another speaker called the present property taxation a horse and buggy system, and strongly endorsed changes. “Thefarmer’s been in a cost-price squeeze for many years, now he’s caught in a property tax squeeze.” S.C. Two S.C. committees are now studying the situation, Harwell added, and members need to know the views of those interested in the problems. Recommendations \re expected to be made to the 1969 General Assembly. ' % ^ ,1 ri Valuing Property For Estate Tax Purposes BY RICHARD GANTT Attorney Presbyterian College The value of an estate is the fair market value of the property on the date of the owner’s death. Too many people think of their property in terms of what they paid for it. A man may have purchased land for $10,000 years ago, which at.his death Is worth $30,000. The-$30,000, not the 10,000 must be reported for es tate tax purposes. Many corporations have excel lent pension or profit sharing plans that will provide a man on a large sum of money at re tirement age. This sum of money will be taxed in the family’s es tate. If not in the husband’s cer tainly it will be included in his wife’s estate. This asset alone will pull many estates into the tax brackets. There are certain deductions that may be available to an es tate. First, the estate’s executor may deduct the costs of estate settlement Then every estate is entitled to a $60,000 specific ex emption. This means that a per son’s estate must amount to more than $60,000 before it becomes subject to the tax. You may claim a charitable deduction for any property that is left to a church or church agen cy. This amount is unlimited and for tax purposes, comes “off the top* of an estate where the tax rates are the highest This pulls the estate down into a lower bracket thereby reducing some of the tax bill that will be levied. The marital deduction is a val uable deduction. It allows a mar ried person to pass to his spouse up to one half of his estate free of tax. Taking full advantage of the marital deduction, in effect di- | vides the estate in half for tax purposes. Not only is there less property subject to the tax, but the rates at which the remainder is taxed are lower. tion. It usually helps the sur viving wife but not her child ren. All of the property she re ceived will be subject to the es tate tax at her death. Her es tate will not have the advant age of deducting one half of the estate. Therefore the tax bite will be much larger than it was in her husband’s estate. Once you are aware of the Fed eral and South Carolina estate tax, your next stop should be to make proper plans to lessen the tax burden. Your lawyer, trust officer or CPA can help you. * * * WORTH t&iLaw© ABOUT Business must take on the task of helping qplve social or people problems, as an added dimension of management, and government must cooperate in ways that will not dilute the indispensable force for good which business has become as the employer of six out of seven people in the United States work force. For the long pull, a simple, direct incentive needs to be developed, so that pro viding hard-core jobs and thus helping to upgrade life in our country wf) 1 become feasible for businesses other than just the big or the big-hearted. —C. W. Cook, Chairman General Foods Corporation Many families think the estate tax is a one-time problem. How ever, the tax is levied when the husband dies and when his wife dies. Therefore, there are two tax bites before the children re ceive the property! Of the deduc tions noted shove, the most valu able one is the marital dedoc- * * * Meteorology plays a vital role in the Air Force mission. To day, more than ever before, the United States Air Force needs qualified meteorologists to in sure that our aerospace team re mains second to none.