The Michigan Daily - Friday, October 23, 1998 - 7
money to stay
Head over heels
IRS forces restaurants
to pay taxes on tips
WASHINGTON (AP) - Though
their national party trails badly in the
money race, Democratic candidates in
many of the most-watched contests this
election are raising enough to stay com-
petitive with Republicans.
A review of the latest Federal
Election Commission reports from four
dozen of the most-watched House races
showed that 27 Democrats held an
advantage in cash on hand over their
opponents going into the last month of
In the top 12 Senate races, the cash
advantage was evenly split, with
Democrats leading in six races and
Reicans leading in the others.
But the GOP party committees,
which hold commanding fund-raising
9 advantages over their Democratic coun-
terparts, are in a position to try to tip the
balance by targeting large sums of their
own money and advertising at key races
in the final days.
Already, GOP candidates in such
battleground states as California,
Florida and Texas have benefited from
large infusions of cash or ad buys by
the national parties - an effort the
Democratic Party acknowledges it
won't be able to match.
"We're always outspent. That's noth-
ing new," Democratic National
Committee spokesperson Melissa
Bonney Ratcliff said.
Democratic candidates planned early
to build their own campaign warchests
rather than relyon late handouts from
their party, which has been strapped by
its own fund-raising controversy the
last two years.
For instance, Democrat Gail
W Riecken, who is looking to unseat Rep.
John Hostettler (R-Ind.), has so far out-
raised her opponent $644,000 to
"Gail knew that in order to take this
race, she was going to have to raise
more money than her opponent,"
campaign spokesperson Heather
Fidler said. "The national party was
of far less importance than what was
happening in the candidates' bank
Ratcliff said the party intentionally
sent its primary fund-raisers, including
President Clinton, out to raise more
directly for candidates than in past
years in order to "make sure that candi-
dates are well-financed on their own
and can be competitive."
While money isn't the only factor
in determining which candidates will
be successful on Nov. 3, the cash-on-
hand figures are looked at closely as
a signal of which candidates are best
positioned to get his or her message
to voters in the crucial last days of the
Mary Mead Crawford, spokesperson
for the National Republican
Congressional Committee, said the
GOP was confident of its candidates'
financial status. "Looking at some of
the tightest races, we're in fine shape,"
The traditional incumbent's advan-
tage explains the edge held by many
Democrats in watched races, where
Republicans are trying to gain seats that
will add to their majorities in the House
Rep. Cal Dooley (D-Calif.), for
example, has raised $593,000 this cycle
and reported $352,00 on hand as of
Sept. 30. His challenger, Cliff Unruh,
had raised just $158,000 and had
$77,000 left for the last month.
The difference came largely from the
$387,000 Dooley received from politi-
cal action committees, the donating
arms of special interests group that
most often gravitate toward incum-
bents. Unruh had raised just $13,200
Republicans, however, have some of
their own money advantages to brag
In Illinois, GOP House challenger
Mark Baker reported $406,000 in the
bank for the last month of his campaign
to unseat Rep. Lane Evans (D-Ill.).
Evans, a 16-year veteran of Congress,
reported just $180,927 in remaining
And in Pennsylvania, where Joe
Hoeffel lost to Republican Rep. Jon Fox
by just 84 votes in 1996, Hoeffel had
$150,000 more in cash on hand but was
lagging $500,000 behind Fox in fund-
raising this cycle.
Crawford said discrepancies in cash
on hand could reflect that only one can-
didate had purchased his or her final
TV buy before the last reporting dead-
line. "That's a lot of money that goes
out the door," she said.
A computer analysis of the latest
FEC reports showed that Republicans
hold a slight edge in the money race
when the individual treasuries of all
435 House races are examined.
Republicans had more financial
resources - their combined spending
and remaining cash - in 230 of the
races, while Democrats held the advan-
tage in 203. Two third-party candidates
had the most in combined spending and
remaining cash in their races, the analy-
Incumbents hold a cash advantage
in most key Senate races too, with the
notable exception of Sen. Carol
Moseley Braun (D-Ill.) Her $5.8 mil-
lion in receipts have been dwarfed by
Republican challenger Peter
Fitzgerald, who has spent more than
$10 million of his own fortune on his
Fitzgerald reported $730,000 in the
bank at the end of September compared
to Moseley Braun's $390,000.
In other hot races, Sen. Barbara
Boxer (D-Calif.), had $3.67 million on
hand, compared to Republican Matt
Fong's $2.19 million. The Republican
Party, however, has begun investing
heavily in California.
WASHINGTON (AP) - Uncle Sam doesn't
serve the food or the wine, but the government is
insisting on its share of the tip.
The Internal Revenue Service has won
another round in its long court battle to force
restaurants to cough up payroll taxes on tips,
even if they're not reported to employers as
required by waiters, waitresses, busboys and
Although the IRS insists its new focus is a
voluntary program based on educating restau-
rant employees, the recent U.S. Court of Appeals
decision marks the second time a federal appel-
late court has certified the government's author-
ity over tips.
The National Restaurant Association
promised yesterday to continue the fight, both in
court and in Congress, to shift the IRS tax bur-
den to the employees.
"They shouldn't be able to go after the employ-
ers for something that is clearly the employees'
responsibility," said Kathleen O'Leary, lobbyist
for the 175,000-restaurant organization.
At stake are billions of dollars in cash tips
plunked down on tables at eateries and taverns
that do $250 billion in business each year. No
one is sure how much people dole out in cash
tips, because unlike in credit card transactions,
few records are kept.
In, 1996, the most recent year complete
records are available, $6.2 billion in tips were
reported to the IRS from food and beverage
establishments - an amount the agency
believes is less than a third the real amount.
Employees are supposed to report all tip
income to their employers each month so
that both can contribute their proper shares
of payroll taxes into the Social Security
"The tipped employees are, in effect,
bound by an honor system," observed a
three-judge panel of the U.S. Court of
Appeals for the Federal Circuit in its deci-
sion last week.
When the employees fail to keep their end
of the bargain, however, the judges said the
law still makes employers liable for payroll
taxes. The panel upheld the IRS's power to
use a formula to estimate what the business
should owe, without trying to track down the
"Congress specifically contemplated the
assessment of an employer-only (payroll) tax
when employees do not accurately report their
tips," the judges wrote.
The ruling came in a case brought by the
Bubble Room, which operates locations in
Captiva and Maitland, Fla. The Bubble Room's
owners were assessed $37,269 in taxes and inter-
est by the IRS in 1990 after reporting a cash tip
rate of only 1.4 percent, compared to 16.4 per-
cent on credit card tips.
Because IRS did not audit the employees
and relied on its formula, restaurant officials
say the court's affirmation could bring an
unwanted burden to thousands of businesses;
Christian Doman, SNRE first-year student partakes in the
Homecoming events in the Diag yesterday. The events were
sponsored by the Student Alumni Council. Other Homecoming
events this week included a pep rally last night.
Reebok tries alternative marketing
methods during NBA lock out
Los Angeles Times
LOS ANGELES - With the National Basketball
Association season in danger of dribbling away, the
fate of Reebok International Inc.'s new Allen Iverson
model shoes has grown even more dependent upon
alternative marketing thrusts such as the Reebok sign
inside Roscoe's House of Chicken & Waffles here and
the new Iverson basketball shoe sitting in a plexiglass
display case at the Posh Kliptz barbershop near
Inglewood High School.
"We can't get away from the fact that the NBA
game isn't going to be there for a while'" said Carl
Washington, a Los Angeles-based urban marketing
manager for Reebok. "But we have a commitment to
launching Allen's new shoe on Oct. 23 and we're not
going to back away from that."
Washington's army of street teams are placing the
$115 Reebok shoes and product literature in urban
gathering spots in big cities such as Los Angeles, San
Francisco, Las Vegas and San Diego. The street-ori-
ented marketers hope to get influential consumers
talking about the shoe by outfitting hip-hop artists and
radio disc jockeys with the new shoes.
They're giving away key chains, water bottles and
Iverson T-shirts at concerts and radio station giveaways.
And, they're placing the Iverson shoe in barber shop dis-
play cases, hoping to shape conversations in a setting
where customers have little to do but talk as they wait
The goal is to create a buzz among urban trendset-
ters that will spread into suburbia without the benefit
of television exposure that NBA games can provide -
and that expensive shoes traditionally have used to get
noticed on crowded shoe-store shelves.
Reebok executives acknowledge that it's easier to
sell basketball gear when the shoe's namesake is play-
ing his highly publicized game. "Ideally, we'd like the
"We're going with a more grass-roots style of
- Travis Gonzolez
season to be up and running," said Henry "Que"
Gaskins, Reebok's marketing director for the Iverson
line. "At the end of the day, Allen's popularity turns on
his being able to do his thing on the court."
Indeed, big-name endorsements by top NBA stars
helped to drive athletic shoe sales for most of the past
decade. Enticed by the otherworldly success that Nike
Inc. enjoyed with Michael Jordan, shoe companies
rushed to sign top players. Sports marketers also
believed that the famous names could help to build
credibility for athletic gear ranging from uniforms to
The NBA remains a power to be reckoned with in
the sports marketing world - as is witnessed by
Nike's role as outfitter for 10 NBA teams and shoe of
choice for 65 percent of the league's players. But even
before the NBA lockout, shoe marketers found that
consumers were no longer content to wear a shoe sim-
ply because an athlete gets paid a handsome sum to
wear it to work. Consumers are increasingly likely to
select shoes and apparel that mirror their overall
lifestyles. That's one reason why sales of basketball
shoes were flat last year.
So shoe company marketing executives are scram-
bling to determine which athletes can successfully be
recast in that new light. Reebok executives, for exam-
ple, maintain that Iverson's appeal to young, urban
consumers extends beyond basketball into music and
"He represents the whole hip-hop generation,
Gaskins said. "While the (shoe market) has become
very fragmented, with Allen, what you've got is a
lifestyle that can sell whether there's a season or not.
Reebok's new Iverson ads, which began playing this
week, show the star playing basketball. But Iverson cuts
to a basket in a gritty city park rather than a stylish NBA
arena. Reebok uses Iverson's distinctive style of play to
emphasize individuality - an increasingly common
theme in sports marketing.
The street-oriented theme also is evident in a com-
mercial for the new Kobe Bryant basketball shoe from
Beaverton, Oregon-based Adidas-America that goes
on sale Monday. There's no NBA footage of the youth-
ful Los Angeles Lakers guard in the ads, which focus
more on Bryant than his NBA connection.
"We're going with a more grass-roots style of adver-
tising,' said Adidas spokesperson Travis Gonzolez.
The shoe industry's street-level marketing push takes
its cue from the music industry, which long has used
street teams to promote new music to largely black and
Latino urban consumers who play a significant role in
what becomes fashionable in the broader market.
Reebok and other shoe companies are scrambling to
outfit hip-hop groups and radio disc jockeys with their
new shoes. Reebok might also sponsor a national hip,
hop dance contest - and polish its image by outfitting
top contestants who wear athletic shoes with new mod-
els that are both stylish and practical.
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Continued from Page 1
make the mistake of separating the two
movements," said Shanta Driver,
National Coalition to Defend
Affirmative Action By Any Means
Professors explored affirmative
action from another viewpoint at yes-
terday's lectures and discussions.
Sociology Prof. Carol Kinney
spoke with a group of 30 students
yesterday morning at the Union about
tracking - the separation of students
according to ability level - in school
Kinney said tracking demands con-
cern because the battle for equality
begins long before the college applica-
Kinney said her decision to cancel
her class and lecture during the Days of
Action stems from her belief in the
importance of faculty input in the
"I think faculty are concerned about
affirmative action, whether they are for
or against it because it affects who is in
your classes and the-direction of the
University," Kinney said.
Debates sponsored by the Asian
Pacific American Law Students
Association also expanded the realm of
Asim Rehman, who helped organize
the debates, said the group hoped to
explore the issue of Asian Pacific
American support of affirmative action
through a debate format, permitting
exposure to both sides.
"In rallies there (is) lots of energy
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INTRODUCTORY ZEN Meditation course
5 Thurs. eves. begins Oct 29. Meditation
workshop 9 a.m. - noon Sat. Oct. 31. Zen
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JURORS NEEDED - FOR Child
Advocacy Law Clinic Child Abuse Mock
Trials: Nov. 2 Noon-5pm, Nov. 3 noon-5pm.
Student ,discouhnts do not annlv to Sedals