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January 17, 1970 - Image 8

Resource type:
The Michigan Daily, 1970-01-17

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Saturday, January 17, 1970



Foundation wins tax loophole

Proposed Observatory-Forest
extension touches off dispute


WASHINGTON (JP -A months-{
long, day and night lobbying ef-
fort won the W. K. Kellogg Foun-
dation of Battle Creek, Mich., pre-
ferential treatment in the House-
passed tax reform bill and ulti-
mately helped other foundations
beat back curbs on their activities.
Private congressional character-
izations of the Kellogg effort
ranged from "crude" to "tough" to
"persistent" to a description of
Kellogg lobbyist James Dick Rid-
dell as a man who "knew j *u s t
where to go."'
The Kellogg interests' persist-
ence won them a hand-tailored
exemption from limitations on
business ownership, with t h e
George Hormel Foundation of
Austin, Minn., also profiting from
the law.
Their success typified the work
of some private interests in argu-
ing for tax law exemptions while
'tax reformers kept public atten-
tion spotlighted on attempts to
narrow well-known loopholes such
as the oil depletion allowance.
At stake for the foundation was
control of certain businesses. The
best-known of these were the cer-

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reform bill first, was relatively'
tough on foundations, including a
requirement t h a t foundations
must divest themselves of control
of any businesses by reducing its
holding of voting stock in a n y
particular firm to 20 per cent or
The divestiture requirement wasI
the focus of the Kellogg activity.
The Kellogg Foundation, which
controls 50.2 per "cent of the stock
of the Kellogg Co., argued that
its ability to contribute to char-
itable and philanthropic purposes
could be severely damaged if ib
were firced to sell the bulk of its
Kellogg's lobbying effort w a
principally handled by Riddell, a
Washington-based attorney, a n d
by Deryl Fleming, director of pub-
lic relations for the cereal maker.
The result in the Ways and.
Means Committee, approved in
turn by the full Mouse: 15-10 ap-
proval of exemptions that would
permit the Kellogg Foundation to
hold all its stock in Kellogg Co.
The result in the Senate Finance
Committee: 9-7 pproval of a loos-
ening of the entire divestiture pro-
vision such that any foundation
could hold up to a 50 per cent in-
terest in a business.
Thus, Kellogg is safe whether
the House version or the Senate
Finance version is enacted.
Riddell and Fleming propound-
ed the Kellogg case to a reporter
for much of two hours. "Now
you've heard about what we told
the congressmen a n d senators,"
Fleming said.
"We must've talked to practic-
ally every one of them 17 times,"
said Riddell, who was a tax coun-
sel to the Ways and Means Com-
mittee from 1953 to 1956.
"We had a good case, "we just
had to sell it," said Riddell. "If I
couldn't win with a case like this,
I'd quit. But the other foundations
thought we were crazy. They told
us we might as well give up."

having a drink about midnight Continued from Page 1) orities is necessary. "It has been
and I'd t h i n k of somebody we SGC Coordinating Vice Presi- the predisposition of urban de-
hadn't contacted," Fleming ex- dent Bruce Wilson feels the term sign in Ann Arbor to emphasis
plained. "So off I'd, go to the "minor infringement" to be an vehicular accessibility and travel'
phone booth and get the guy out: underestimation. "The extension over pedestrian accessibility and'
of bed." would essentially destroy the pe-- movement.
Riddell estimated - conserva- destrian traffic pattern from Ob- "Ann Arbor must begin to es-
tively, he said - that they con- servatory and Geddes down to tablish priorities to determine
tacted 2,000 persons across t h e Forest," he argues. whether city planning should em-
phasize the purely physical di-
country. He wouldn't quite con- On Nov. 6. another report from mensions of roadway circulationj
cede that the purpose of such calls city planning was issued by and efficiency or stress consider-
was to exert political leverage, but Michael R. Prochaska who is now 'atnon of neighborhood. integrityE
he observed that representatives the city planning director. ain coheig, radntict
from states like Arkansas, Louis- and cohesion, area identification
from sates eAransasr Louis- This report agrees with Faber and aesthetic valuation, the re-3
Tana and Texas became aware that; that a re-assessment of city pri- port concludes.
their states grow rice - and Kel -____
logg buys lots of rice; congress-
men from Oregon and Wisconsinc
major paper producers-and Kel- E school counselors
logg buys plenty of cartons.
"He knew just where to look," do" 3
said Rep. Martha Griffiths (D- mo nlore luau adviseT
Mich.), an opponent of the Kel-I
logg exemption.!
The Ways and Means Commit- By SHARON WEINER The office officially opened last
tee chairman, Rep. Wilbur Mills Education students can get more tem ated adjacent to the office
(D-Ark.), was the target of re- than just counseling in their stu- of Students for Educational Inno-
ports from Arkansas that Kellogg dent counseling office. vation ,in the University School
might buy its rice elsewhere. "We serve partially as an input Bldg., the office offers "conver-
Mills said, with constituents center for students who feel a sation, coffee, a coke machine, and
support, "Tell 'em to go to hell." need to complain, question, or dis- a couch as well as academic in-
He opposed the exemption unsuc- cuss any class, professor or re- formation," Astrein says.
cessfully. quirement in the school," says un- "Anyone with interest in teach-
Some members said courtesies dergraduate coordinator of the ing as a profession should stop by'
such as rides home in Kellogg air- office Bruce Astrein. "It's a place when they are freshmen or soph-
craft were extended during t h e to bring information as well as to omores so they can plan for the
persuasion effort. Rep. Griffin receive it." necessary courses," he notes, "al-
took one of the rides, he said, to though we can also help upper-
tion She voted against ite eProf. Alfred F. Conrad of the ,classmen who have just decided.
t Law School will serve as presi- to become teachers'"
As the Ways and Means com- dent of the Association of Ameri- "Students can pick up informa-
mittee worked on foundation can Law Schools next year. tion on psychiatric draft, and

eal-making Kellogg Co. and the But the Kellogg lobbyists didn't
meat-packing Hormel Corp. ! give up - and they didn't confineE
The House, whose Ways a n d ; their contacts to congressmen.
Mean. committee handled the tax "We might be sitting somewhere

Heavy Duty Steering
and Suspension Parts

This report points out that the
area that would be affected by
the extension of Observatory to
Forest is characterized by high
density student housing. It says
"the cohesive and vital nature of
the area would be seriously
threatened if traversed by high
volume, non-local traffic," which
would result from the proposed
In keeping with his views about
the extension, Prochaska recom-
mended to the planning commis-
sion that the city use an alternate
route which would extend Ob-
servatory only to Washtenaw Ave.
Prochaska believes the alternate
route would preserve community
land use and pedestrian circula-
tion, and at the same time "move
the traffic in a safe way."
Prochaska believes it is not pas-
s ible for the present street ar-
rangement to handle the increase
in traffic it will have in the next
few years.
"If you do approve the Obser-
vatory-Forest extension, you are
encouraging auto traffic into a
pedestrian and residential area. If
you don't approve it, you have to
look for other alternatives," he
In the 1963 Central Campus
Planning Study, the University
also recommended the same basic
idea-new roads to handle the in-
creasing volume of traffic.
"Our primary concern in the
study was how to provide access
to the hospital," particularly the
1,000 car parking structure, said
Fred Mayer, University planner.
He explained that since the study
was done, the neighborhood has
changed to a student neighbor-
Another factor which may have
influenced the planning commis-
sion to support the Observatory-
Forest extension, says Mayer, is
that it "helps take the traffic off
the street where you have kids
going to elementary school."
SGC vice president Wilson,
l however, is concerned about the
students living in the neighbor-
. hood and the students living in
Markley Hall who have to cross
aObservatory to get to class.
"The Observatory-Forest exten-
sian represents a .devotion to auto-
Smobile traffic in the city which
will invade the residential district
as well as pedestrian traffic," he
Despite the protests, and Pro-
chaska's report, the city planning
commission is sticking by its orig-
inal proposal, now awaiting con-
sideration by the council.
At the same time , Wilson is
drafting an SGC resolution he
plans to introduce next week call-
ing for SGC to request the city not
extend Observatory.


measures, language suggested by
Riddell w as presented which
would exempt from business di-
vestiture rules a foundation which
owned 55 per cent or less of a'
business, had been established by
the irrevocable trust document of
a living person prior to Dec. 31,
1939, and held a business whose
stock was traded on a public ex-
Kellogg Foundation naturally
fit the formula.


Announces Open Petitioning
Grads and Undergrads
Sign up for interviews at SGC offices, 1 st floor, 1548 SAB
Petitions due Monday, January 19, 5:00 P.M.


Live in an exotic setting...
Decorate Your Room with Bed-
spreads. Pillows, Wall Hangings;
Pottery, and Incense from India
and Persia.

He will become the third Uni-
versity 1 a w faculty member to
hold the presidency of the asso-
ciation, made up of all the fully
accredited law schools in the na-
tion. As president-elect, Prof.
Conrad will serve on the associa-
tion's executive committee during
the current year.
The association is an organiza-
tion through which some 120
member schools seeks to improve
legal education and research by
exchanges of information and
joint action.
The designation "eminent eco-
logist," one of the highest honors
of the Ecological Society of Amer-
ica, has been conferred upon Prof.
Stanley A. Cain.
Prof. Cain, who now serves as
Charles Lathrop Pack professor of
conservation in the School of
Natural Resources, recently com-
pleted three years as U.S. assist-
rant secretary of the interior for
fish, wildlife, and parks.
The society acknowledged that
Prof. Cain "has preceded us and
led us in the development of the
science of ecology."

placement referrel services in the
office, he adds.
Astrein encourages "students
interested in counseling or just
interacting with other individu-
als" to stop by the office.
"We're open five days a week
nine to five - including the lunch
hour," he says.
According to Astrein, over 100
students come in for counseling
or conversation e v e r y day, al-
though, he adds, "That's not much
compared to t h e 5,000 students
who take classes in the educa-
tional school."
"We're going around to t h e
dorms to publicize our services,"
he says.
"We'renot only serving as a
counseling office, but as a center
for expanding public relations
within the education school and
promoting the school to students
in the literary college, adds grad-
uate coordinator Susie Brigham.
"We are not competing with the
regular counselors," 'she says.
"We're only a supportive group,
but we can offer a peer relation-
ship in our office which may be
more comfortable for many stu-

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330 Maynard



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JANUARY 15, 1970






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