Friday, December 7, 1984/The Battalion/Page 13
roposed flat taxes will
ffect municipal bonds
United Press International
NEW YORK — The flat-tax pro
posals unveiled by the Treasury De
partment could have a dramatic im
pact on all securities markets, but the
outcome of debate on the proposals
will be especially significant for mu
nicipal bonds.
I “Out of the multi-sided debate
which will ensue between the White
House, Treasury, Congress, state
and local governments and an array
pflobbyists and special interests, sig-
nificant tax reforms seem sure to
||merge,” said Steven J. Hueglin,
Bartner in Gabriele, Hueglin 8c
Bash man, a Wall Street bond house
Khat just completed a study, “Flat
&ax and the Municipal Bond Mar-
Iket.”
I “But despite the well-publicized
Negatives for the municipal market,”
Hueglin said, “the real sleepers in
Bhe proposals are positive for bond-
holuers.”
I For bond holders the major el
ements in the proposed tax reforms
B re:
d •Reduction in the top individual
Mncome tax rate to 35 percent with
elimination of various deductions,
ncluding those allowed for state and
t local taxes.
I •Reduction in corporate tax rates
to 33 percent with elimination of ac
celerated depreciation, investment
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Other issues likely to be
glintyfr&tzd from the tax-
exempt sector are student
loan bonds, and pubiic
pifypqpe industrial bonds
as those issued for
tax credit benefits and bank deduc
tions for carrying municipals.
•Prohibition of some tax-free
municipal bonds now being issued.
•Treatment of capital gains as or
dinary income with gains adjusted
for inflation.
Hueglin said the only real neg
ative for bondholders is the pro
posed reduction in the income tax
maximum to 35 percent.
“The municipal market is more
sensitive to changes in supply than
changes in tax rates,” Hueglin said
in a telephone interview.
“Fear that lower taxes will hurt it
are largely unfounded.”
Hueglin said proposals that effec
tively eliminate most tax shelters and
severely reduce the appeal of real es
tate as an investment are “most posi
tive” for municipal bonds.
Many issuers will be adversely af
fected.
“Sure to go are tax-exempt cor
porate bonds,” Hueglin said. “Tax-
exempt housing bonds are almost
certainly out.”
Other issues likely to be elimi
nated from the tax-exempt sector
are student loan bonds, public pur
pose industrial bonds such as those
issued for stadiums, and private
bonds issued by hospitals and col
leges, he said.
“Even if all of these are not elimi
nated, a third of supply could be cut
off,” Hueglin said.
Proposals to eliminate deductibil
ity of state and local taxes also will
have major impact on bondholders.
“People in the 50 percent bracket
won’t get half price on state and local
taxes anymore,” he said.
For example, for someone in the
42 percent bracket, $1 of state taxes
could cost $1 instead of 58 cents as
before.
But this in turn will make state
and local exemptions on municipal
bonds more important, especially in
high-tax states like New York and
California.
Although tax reforms will proba
bly not become law until 198§ or
1987, changes affecting long-term
bonds will be anticipated by the mar
ket in the coming moiiths.
Paris Ballet
to perform
in festival
United Press International
SAN ANTONIO — The Paris
Ballet will present three produc
tions in the 1985 San Antonio
Festival, marking the dance
group’s first American appear
ance in 36 years, festival organiz
ers said 1 hursday.
Negotiations for the ballet’s ap
pearance were completed in Paris
between festival director Parvan
Bakardjiev and M. Andre Lar-
quie, president du conseil of the
Paris Opera Ballet.
The French troupe will per
form a new production of “Swan
Lake,” classic ballet treatments of
“Romeo and Juliet,” and a full-
length ballet in the grand tradi
tion of “Raymonda.”
The exclusive performance
will be the ballet’s first appear
ance in the United States since
1949.
The negotiations also call for
the sets and costumes from the
Paris Opera’s production of “Ro
meo and Juliet” to be featured as
part of the festival’s “Romeo and
Juliet” theme.
In return, the sets and cos
tumes from the festival’s 1984
production of “William Tell” will
be loaned to the Paris Opera,
which may participate in the 1986
Festival, Bakardjiev said.
Key witness says
testimony not true
United Press International
LOS ANGELES — A key prosecu
tion witness in the murder trial of
Ricky Kyle, charged with killing his
father, Texas tycoon Henry Harri
son Kyle, admitted Wednesday she
has not been truthful in her testi
mony.
Jackie Phillips, the defendant’s
half-sister, made her admission as
defense attorneys attacked her cred
ibility, pointing out numerous incon
sistencies in her testimony at the trial
and her testimony at a preliminary
hearing in January.
Phillips testified Tuesday that
Kyle, 22, confessed to her that he
killed their father in July 1983. The
alleged admission came after Kyle,
Phillips and her former fiance, busi
nessman Henry Miller, had been
drinking and taking cocaine the day
of the victim’s funeral.
Phillips, 29, a former fashion
model and admitted cocaine user,
frequently responded to the lead de
fense attorney’s questions with heavy
sarcasm, mocking laughter and an
occasional obscenity.
At one point, Phillips apparently
became so unnerved that she ad
mitted she had been less than com
pletely truthful when she testified at
the preliminary hearing.
When asked if she had told the
truth at that hearing, Phillips replied
“kinda,” and then added, “I was try
ing to protect my brother (Ricky
Kyle).”
A short time later, however, she
maintained she had told the truth at
the hearing.
The defense attorney pointed out
numerous inconsistencies in her tes
timony at the trial and her testimony
at the preliminary hearing. They in
cluded:
•Her assertion at the trial that
Ricky Kyle told her he had shot his
father twice. At the preliminary
hearing, she made no mention of
Kyle saying he had shot their father
twice.
•Her testimony at the trial that
when Kyle Confessed the slaying to
her, he was unemotional. At the pre
liminary hearing, she testified he
was “extremely emotional and up-~
set.”
Despite those inconsistencies,
Phillips’ basic story that Kyle con
fessed the slaying to her at Miller’s
home was essentially the same at
both the preliminary hearing and
the trial.
Prosecutor Lewis Watnick plans to
reinforce Phillips’ testimony by call
ing Miller, who also allegedly over
heard Kyle’s confession.
The prosecutor alleged last week
in his opening statement that Kyle
“executed” his father by shooting
him in the back because he feared he
was about to be cut out of the multi
millionaire’s will. Kyle and his
brother, Scott, were the principal
heirs to an estate valued at up to
$100 million.
Good friends keep you going
when all you want to do is stop.
want ads
Your feet hurt. Your legs
hurt. Even your teeth hurt.
But your friends thought
you looked terrific. And with
them urging you on, your
first 10 lalometer race didn't
finish you. You finished it.
Now that you have some
thing to celebrate, make
sure your support team has
the beer it deserves. /
Tonight, let it be Lowenbrau.
Lowenbrau. Here’s to good friends.