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TAX TALKTo the Editor:I’m writing regarding your roundtable on Taxation and Growth, held in Washington this year (CE: June 1992).I …


To the Editor:

I’m writing regarding your roundtable on Taxation and Growth, held in Washington this year (CE: June 1992).

I believe it is important to drive home the message to political leaders that our tax system must provide capital formation incentives to sustain a healthy, job-producing economy.

Here are a few suggestions for Washington:

  • Contain/reduce spending: Spending limitations must be put into effect.
  • Environmental/cleanup legislation: Back off to practical laws and policies.
  • Tax policy: Investment tax-credit incentives would stimulate capital formation and investment. Eliminate double taxation of dividends to make equity investment more attractive to investors and corporations seeking to raise capital. Enact a capital gains tax reduction.
  • Banking: Remove Glass-Steagall restrictions for banks and investment banks so they can compete more effectively in the international arena. Encourage freer lending practices by reducing discount rates and relaxing reserve requirements.

Unfortunately, as Europe and the rest of the world has learned the hard way, it takes political courage to blunt the hue and cry for “taxing corporations” and “taxing the rich.”

A.E. Dudley

Chairman, President and CEO

First Brands

Danbury, CT


To the Editor:

The New Germany roundtable, convened in Berlin in December, at the Bristol Hotel Kempinsky, was a wonderful experience. The vibrance of the city, the enthusiasm of the new, unified Germans, the caliber of the presentations and the fellowship of the participants were all outstanding.

Just a couple of observations on the content of the roundtable (CE: March 1992). I am probably viewed as one of the strongest critics of American management. I believe inadequate management capability hampers the efforts of American industry to compete in a global economy. However, I also believe the shortsightedness of American management, a theme sounded by some roundtable participants, is an argument that is often overplayed and generally argued by some person or group with something to sell.

My personal observation is that German bureaucrats, not German businessmen, are naive if they believe they are not facing a significant recession and not losing their global competitiveness. In my experience, Germans are Germans first, and they are very arrogant about the factors that contribute to their high costs (i.e., six weeks vacation and unlimited sick leave). For years, their productivity offset these arrogant demands, but no more. If the Japanese could have a level playing field in Europe, they would beat the Germans competitively.

In the final analysis, the fundamental reasons the unified Germany will work are strong German nationalism and a willingness to pay the price. Ultimately, the New Germany will be the primary purchaser of the East German facilities, and ultimately, it will have to close some of them. German businesses will participate in this process-it is their contribution to the kitty. Americans don’t need any additional capacity; they have their own problems and don’t have a strong desire to contribute directly to the unified Germany. In addition, American managers now understand the difficult management challenges they face, and they are busy trying to re-educate themselves and the work force to compete in a global economy.

I believe the countries of the former Soviet Bloc will provide an opportunity for those of us who are competitive, and I believe the Germans will only get a small piece of this business.

Darryl F. Allen

Chairman, President and CEO


Maumee, OH



To the Editor:

In line with your request concerning nominations for Chief Executive of the Year, I would like to recommend Vernon Loucks of Baxter International, and Birgit Breuel of the Treuhandanstalt.

Vernon Loucks was behind Baxter International’s massive-and successful-restructuring project, which resulted in hundreds of millions of dollars of savings, a significant reorganization, decentralization of hundreds of corporate positions, and considerable improvement in profitability, return on investment and share value. Baxter, itself, has high values, strong process-improvement programs, and some innovative, value-added services for the pharmaceutical industry.

Another suggestion is Birgit Breuel, head of the Treuhandanstalt. She has been involved in taking over from former Hoesch CEO Detlev Rohwedder, who was assassinated a year ago while serving as the first head of the Treuhand. The 54-year-old free marketeer was unanimously elected chief executive of the Treuhand by the agency’s administrative board April 13, 1991. Frau Breuel has done an extraordinary job in dealing with the largest restructuring and industry privatization challenge in the world to date-that in eastern Germany. Started from scratch, the organization is now a substantial entity of over 3,000 people who are involved in closing, turning around, and selling or merging 10,000 businesses. Frau Breuel has already led the Treuhand through a major portion of the restructuring, including the disposition of approximately 4,000 business entities. Capital investment is flowing into the new Bundeslaendes. This is a responsibility that is unparalleled any place in the world. Certainly, Ms. Breuel contributes significantly to the future economic prosperity and political security of Europe.

Fred Steingraber

Chairman and CEO

A.T. Kearney


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