Remember Engene Charlie Wilson? He was the General Motors chief executive a few decades ago who gushed that what was good for America was good for General Motors and vice versa.
That was in the days when businessmen did not have sophisticated economic models or polling techniques taht could demonstrate the correlation between what was good for them and what was good for the country.
As a result, until recently, businesses that wanted to change -- or maintain -- government policies were reduced to Wilson-like effervesence or hand-wringing.
But no more.
The nation's brokerage industry was one of the leading hand-wringers among American businesses throughout the 1970s. (The acknowledged virtuouso was the steel industry).
After riding high in the 1950s and 1960s when American demand for stocks seemed insatiable -- and when brokerage commissions were fixed -- Wall Street came face to face in the 1970s with a severe decline of investor interest in stocks and a dose of rate competition mandated by the federal government.
Although the industry fought back by creating markets for stock options and commodities futures to generate commissions to replace those lost on stock trading, one after another famous Wall Street firm was either merged or folded.
But Wall Street knew it had right on its side. After all, if stock prices were listless -- because investore did not want them -- then American industry could not sell new equities to come up with the monies needed to repair and expand the nation's industrial base.
Two years ago, the industry trade group commissioned the economic consulting firm Data Resources Inc. to explore whether a cut in the capital gains tax would increase investor interest in common stocks.
The consulting firm said it would. Much to Wall Street's surprise -- and in the face of Carter administration opposition -- Congress enacted just such a tax cut in 1978.
Today the same industry trade group, the Securities Industry Association, released a report prepared by the Opinion Research Corp. of Princeton that shows the capital gains tax cut stimulated the investment it was supposed to and that other tax proposals designed to boost investment would have similarly salutary effects.
Securities Industry Association President Edward I. O'Brien said he plans to distribute a copy of the ORC study to each and every member of Congress.
According to the study, the 516 executives interviewed said that if one or more of a variety of tax proposals were enacted into law (the proposals range from increasing the amount of dividends that are exempt from taxes to putting a ceiling on the tax rate on investment income), they in turn would make new or increased investments in either common stocks or other vehicles such as real estate, bonds, mutual funds and the like.
The study has some serious limitations. It surveys only rather well-heeled executives who work for the biggest 800 companies in the nation (the executives did not know ORC was working for the Securities Group), most of the executives (90 percent) already own stock and have securities holdings alone of about $97,000 apiece.
As ORC cautions, data from its so-called executive caravan cannot be directly projected to the national population, nor to corporate shareholders in general.
Furthermore, the survey deals with intentions. It is one thing to say this is what you will do, another to do it.
Nevertheless, the ORC survey offered executives five alternative tax proposals, each of which has been bandied about in one form or another on Capitol Hill:
A reduction in the maximum tax on investment income to 50 percent, the same level that applies to income from wages and salaries. About 55 percent of the executives said they would make new investments were the proposals enacted and 31 percent of those said those investments would be in common stocks.
A deferral of capital gains taxes if the gains are reinvested within six months. Nearly 70 percent said they would boost their investments, with 42 percent of them citing common stocks.
A reduction from 12 months to six months of the period an investment must be held to qualify for special capital gains treatment. Nearly 50 percent of the executives said such a move would encourage them to increase their investments and 39 percent said their investments would be in common stocks.
A change in the treatment of dividends taxation so the taxpayers would receive a partial credit for taxes paid by the dividend-paying corporation. Nearly 75 percent said they would step up their investments and 67 percent said the investment increase would be in common stocks.
An increase to $500 (from $100) for individuals and to $1,000 (from $200) for joint returns the amount of dividends that are excluded from taxation. About 60 percent of the executives found this proposal attractive, and again common stock was a major beneficiary.
Surprisingly, most of the executives did not find all that attractive a variation of a French investment incentive enacted two years ago that would permit investors to exclude from taxable income up to $2,000 for new funds invested in corporate securities. Many analysts say that the French tax change contributed mightily to the upsurge in interest French investors have had for buying stock of French companies.
Implicit in the SIA experience, of course, is the notion that companies have to go too much into debt (either by borrowing from banks or through the bond market) because their stocks are underpriced. If stock prices rise, companies will find it financially attractive to sell new stock issues.
American companies would then be on a much firmer financial footing than many are on today.
Incidentally, of course, the brokerage firm would generate a lot more commissions on stock trading (without any of these tax changes, stock market volume has been at recond levels during the first six months of the year).
What's good for America, well, just happens to be good for Wall Street.