Trends

NEW TAXPAYER VICTORIES

The intrusion of the federal government into our lives is nowhere more ubiquitous than on our paychecks, where the withholding of Social Security and income taxes takes an increasingly large bite each year. Until recently the wage-earning taxpayer was helpless to resist federal withholding, but two recent decisions offer new hope. In two unrelated cases, taxpayers have successfully fought back against Social Security and income taxes, respectively.

The income tax case was decided by Judge Clarence Newcomer of the U.S. District Court in Philadelphia. The case involved two employees of the American Friends Service Committee who, for religious reasons, oppose paying taxes for the support of war. In December 1969 they requested their employer to stop withholding 51.6 percent of the tax for which they were liable, and AFSC agreed to the request. The employees filed regular tax returns on the remaining 48.4 percent, and contributed an equivalent 51.6 percent to a nondefense, "humanitarian" government agency. These checks were subsequently returned and the employees bank accounts attached for the unpaid tax.

In May 1970 the two employees and AFSC filed suit against the IRS, attacking the withholding method of collecting income taxes from employees who have religious scruples against supporting war. On December 31, 1973, Judge Newcomer ruled the withholding tax requirement of the Internal Revenue Code "unconstitutional as applied to the facts of this case in that it operates as an abridgement to the free exercise of the religion of [the] plaintiffs.…" The decision forbids the IRS from withholding 51.6 percent of the plaintiffs' federal income tax, but permits it to continue to collect this portion of their tax via attachment of their bank accounts, the following year. Since the case was not filed as a class action, the judge could not extend the ruling to cover other taxpayers in similar circumstances. But he noted that AFSC "may seek to exempt future employees by first seeking such exemption from the Internal Revenue Service and finally the court, if necessary."

Just such an exemption was recently sought—and obtained—with regard to Social Security taxes, but in this instance the tax itself was challenged. James Dale Davidson, executive director of the National Taxpayers Union, formally waived his Social Security benefits and has refused to pay his Social Security taxes on grounds of nonreligious conscientious objection. Davidson's case rested on a recent Supreme Court ruling that conscientious objection to the draft must not exclude those whose positions derive from a consistent moral philosophy. Although he had hoped the IRS would take him to court in a test case, the IRS decided to settle with Davidson privately. They have—and Davidson is now exempt from Social Security taxes. The National Taxpayers Union is now seeking funds and volunteers to force the IRS into court on the issue, in order to establish the point for all potential conscientious objectors. Although Davidson himself is self-employed, there appears to be no reason why similar conscientious objection would not be applicable to Social Security withholding, as well.

SOURCES:
• "Court Limits Power to Withhold Taxes," Marjorie Hyer, WASHINGTON POST, January 21, 1974.
• "Anti-Social Security," Shirley Scheibla, BARRON'S, January 21, 1974.

AFTERMATH: THE OBSCENITY RULING

In its 1973 ruling re-establishing a legal basis for the censorship of "obscenity," the Supreme Court chose to ignore the evidence accumulated in Denmark regarding the alleged harmfulness of pornography. Since the Danish government decontrolled written works in 1967 and visual material in 1969, the Institute of Criminal Science has continued keeping careful records of sex-related crime patterns. Between 1959 and 1970, the Institute found, there was no discernable change in the rate of occurrence of rape in Copenhagen. Other sex offenses, however, have decreased sharply: exhibitionism is down 58 percent, peeping is down 80 percent, molesting of female children is down 69 percent. These figures appear to show that the presence or absence of pornography has no effect on the frequency of rape, and may act as a (victimless) substitute for other forms of sex crimes—a safety valve, in effect. Thus, since pornography does not incite crime, the Supreme Court's decision is simply the imposition of a particular code of morality by force of law.

Fortunately, the people involved in writing, filming, distributing, selling, and exhibiting works which might be judged "obscene" are not taking the new censorship lying down. (And neither are the consumers: The Devil in Miss Jones was the fifth largest-grossing film of 1973 in VARIETY's annual survey, while Deep Throat ranked 11th; the two grossed $7.3 million and $4.6 million, respectively.) The major groups involved, and their activities, are as follows:

• Publishers are divided, with many reacting in fear while others refuse to be ruffled. Kenneth McCormick, chairman of the Freedom to Read Committee of the Association of American Publishers reports that a certain amount of "self censorship" is going on among publishers, and notes that the level of prosecutions has been less than expected. Among the publishers taking a firm stand against changing policy because of the Supreme Court ruling are Pocket Books (Simon & Schuster), Viking, and Random House. The latter provided immediate legal defense for a bookseller in Orem, Utah, who was served with a summons in November for selling A CLOCKWORK ORANGE, considered taboo under a municipal ordinance banning "lewdness and obscenity." The charges were subsequently dropped.

• Librarians—the American Library Association's Freedom to Read Foundation has joined with the Association of American Publishers in petitioning the Supreme Court to rehear its five 1973 obscenity cases, and is inviting other appropriate groups to join it in this endeavor. Vice president Everett T. Moore points out the danger to libraries and literature inherent in the Supreme Court's extremely subjective "community standards" criterion for obscenity. Moore also points out that although the Court has not reversed its earlier ruling permitting the private possession of pornography, it has potentially forbidden all means of obtaining such material.

• Film producers—Samuel Z. Arkoff, board chairman and president of American International Pictures, takes the position that "legitimate" films are endangered more than porno films by the Supreme Court rulings. Due to the "community standards" provision, "porno films made on a shoestring will survive because they are so cheaply produced that they can earn back their cost in a few big cities.…But the serious pictures made on the scale of Carnal Knowledge cannot recoup their costs by playing in a handful of cities or illicit movie speakeasies.…These serious, controversial, costly pictures will simply not be produced, or if produced will be so compromised that they will be pap…" Arkoff thereby challenges the position of Jack Valenti of the Motion Picture Association of America, who wants to sacrifice the porno films to the censors for the sake of saving the "legitimate" studio films. Arkoff, by contrast, calls for a broad-based alliance of all film producers, distributors, exhibitors, the press, and various civic organizations to safeguard freedom of expression.

• Film distributors are also concerned, none more so than the Adult Film Association of America, who held their sixth annual convention in San Diego in February. The Supreme Court recently accepted an amicus curiae brief prepared by the Association's legal counsel, Stanley Fleischman, in the Court's pending Carnal Knowledge case. Fleischman is working with the Association to plan further legal strategy in all the states where members operate. There are now some 80 obscenity cases pending in the Supreme Court, more than in any other field, at a time when crime is at record levels and court calendars are jammed with cases involving real crime. Still, progress of a sort is represented by recent surveys showing that a majority of big-city residents (65 percent in Kansas City, 75 percent in Los Angeles) agree that an adult should have the right to see any pictures of sex acts in movies or magazines.

Perhaps the most telling commentary of all on the censorship issue is the appointment of Marty Snyder to the nine-member movie censorship board in Clarkstown, New York. Mr. Snyder, who claims to be "no stuffed shirt," has been blind for several years.

SOURCES:
• "Pornography in Denmark," PLAYBOY, January 1974, p. 53.
• "Two of Top 50 Films from the Porn Belt," Vernon Scott, UPI (Hollywood), January 24, 1974.
• "Publishing Houses Policing Selves Due to Court Ruling," Eric Pace, New York Times News Service, January 20, 1974.
• "Librarians Speak Out: Court's Obscenity Rulings Aren't Going Unchallenged," Everett T. Moore, LOS ANGELES TIMES, September 3, 1974.
• "Porno Ruling Held Peril to Big Films," LOS ANGELES TIMES, September 21, 1974.
• "Adult Film Group in Quest to Gain Respect," Arthur Knight, LOS ANGELES TIMES, February 17, 1974.
• "Marty Can See What Others Might Miss," AP (New City, NY), September 21, 1973.

SAYING NO TO CONTROLS

Although most American oil companies have meekly complied with the federal energy czar's decrees, two large companies have taken principled stands against them—and have backed up their words with legal actions. First to take action was Gulf Oil, which has filed suit against the government's crude oil allocation scheme. Despite the fact that Gulf's management has been able to secure enough crude to operate their refineries at 91 percent of capacity, the Federal Energy Office has ruled that all crude beyond that needed to operate at 76 percent capacity be sold to those companies with less than enough to run at 76 percent. Gulf has rightly challenged this Robin Hood system as confiscatory. In announcing the company's suit, Gulf executive vice president Z.D. Bonner stated, "Without a doubt this amounts to the unwarranted and, we feel, unlawful taking of private property."

A second challenge to FEO controls occurred two weeks later, when Union Oil Company filed suit against FEO demands that it sell fuel to independent oil dealers in preference to its own dealers. Union is defying the order, and has filed suit in U.S. District Court in San Francisco asking for a preliminary injunction against the FEO order. Union states that the allocation orders are invalid and unconstitutional because they deprive dealers of their property without due process of law. Union and two of its dealers filed the suit as a class action on behalf of all 740 Union dealers in Los Angeles and Orange Counties. A Union representative pointed out that the company could have made the same amount of money selling the gasoline to independent stations, but felt an obligation to its own dealers.

The practical effects of the government's petroleum controls are by now so obvious that even such publications as TIME are pointing out that many European nations have abandoned controls and allowed prices to rise, with the result that long lines at gasoline stations have disappeared. And TIME quotes FEO officials as privately conceding that the crude oil allocation program has been an "unmitigated disaster." As of this writing energy czar Simon has asked Congress to "suspend" the program for 90 days—hopefully, a face-saving way of phasing it out altogether.

SOURCES:
• "Gulf Will Challenge Order to Sell Its Oil to Other Refiners," Robert A. Rosenblatt, LOS ANGELES TIMES, February 12, 1974.
• "Union Oil Challenges U.S. Order to Supply Gasoline to Independents," Ibid., February 27, 1974.
• "Facing the Shortage Alone," TIME, March 4, 1974.

THE GOLD AND SILVER BOOM

The long lines these days are not just in front of gas stations. In many cities equally long lines have been forming outside of coin shops, as anxious persons from all walks of life seek to convert their depreciating paper money into gold and silver coins. Luis Vigdor, coin manager of New York's Tordilla & Brookes, stated, "We can't even handle the volume any more… I've never seen a situation like this." He reported lines of customers waiting one to two hours to get a chance to buy gold. One New York coin dealer has taken to staying in a hotel, to escape the constantly ringing telephone at home and at work. Coin sales at Pacific Coast Coin Exchange have quadrupled in the past year, while gold coin sales increased threefold in the past month at Deak & Co. in Los Angeles.

In Santa Barbara, one Rexall drug store is advertising all items as 50 percent off if purchased with U.S. silver coinage, hardly a good deal at current silver prices, but very possibly a harbinger of things to come. Another Santa Barbara store, Lanello Reserves, is selling survival kits consisting of low-moisture food supplies, along with reverse osmosis water purifiers, silver ingots, and 22-karat placer gold. Vice president Murray Steinman notes that "No economic system unbacked by gold or silver has survived more than 40 years without economic catastrophe."

In New York, mutual funds are turning to gold mining stocks in a big way. Win-Cap, a former go-go fund, has been renamed Research Capital and turned into a gold fund. President Charles B. Johnson believes that "Gold is going to be the primary monetary asset eventually, and its free market value isn't reflected in gold shares yet." John C. van Eck's International Investors Inc. got into gold in 1968 and is now the country's leading gold fund. Its assets have increased from $68 million last December to $125 million in March.

Government spokesmen can denounce gold as a "barbarous relic" all they please, but people all over the world are turning to gold (and silver) as protection against government debasement of the currency. Before long the politicians will have to face the facts and return to a monetary system based on real value.

SOURCES:
• "Americans Buying Gold Frantically," AP (New York), February 28, 1974.
• "New Gold Fever Undercuts Value of Paper Money," Ronald L. Soble, LOS ANGELES TIMES, March 2, 1974.
• "Survival Kits Offered in Crisis," Chet Holcombe, SANTA BARBARA NEWS-PRESS, February 20, 1974.
• "Shifting into Gold," BUSINESS WEEK, December 8, 1973.