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Thursday, June 15, 2000

Korean agreement
offers hope for peace

Bullet The issue: The leaders of North and South Korea have met for the first time and reached agreement on some issues.

Bullet Our view: The meeting provides reason for guarded hope for peace and reunification.

AFTER decades of hostility it's hard to believe, but leaders of the two Koreas have actually met at last and have reached agreements that seem meaningful.

There is always a possibility that the unpredictable regime in Pyongyang will revert to provocative behavior, as it has many times. But for the moment at least there is reason for optimism.

Kim Jong-il, the reclusive successor to his father, the longtime Communist dictator Kim Il-sung, has been an enigma since assuming leadership following his father's death in 1994. Now he has emerged into the spotlight exuding friendliness toward the leader of the long-reviled rival regime to the south, Kim Dae-jung.

The two signed an agreement vowing to work toward eventual reunification of the peninsula, which has been divided since World War II, but this remains a distant goal at best. There was no indication of any agreement on how reunification could be achieved and its mention may be nothing more than wishful thinking.

Of immediate importance to people on both sides of the heavily guarded border, the result of the 1953 truce that ended the Korean War, was the agreement to allow reunions of families that have been divided for decades, innocent victims of ideological conflict.

In addition, the leaders agreed to promote investment by South Korea's vigorously capitalistic economy in the impoverished, Communist North. South Korean capital has been trickling into North Korea in recent years, but the flow may now increase.

In the past North Korea has tried to ignore the existence of the Seoul government and deal only with the United States. Evidently Pyongyang has realized the futility of pursuing that policy.

A good part of the credit belongs to Kim Dae-jung, the former opposition leader who has doggedly campaigned for reconciliation since his election two years ago and seems to have won the confidence of Kim Jong-il.

It is a measure of North Korea's realization that it must deal with its severe economic problems that Kim Jong-il was willing to shelve Pyongyang's perennial demand that the United States withdraw its 37,000 troops from South Korea as a prerequisite for negotiations. That issue was not mentioned in the agreement, nor was North Korea's development of nuclear weapons and long-range missiles, which have aroused Washington's concern.

Nor was there any indication that either North or South will draw down its military forces or relax its vigilance along the Demilitarized Zone at the 38th Parallel, where the war ended nearly half a century ago. When that day comes, we'll know the Koreas have really changed.

Repeal of estate tax
is gaining momentum

Bullet The issue: The House of Representatives has voted to repeal the estate tax.

Bullet Our view: Easing of the tax burden is more likely and more responsible than outright repeal.

Although the U.S. House of Representatives voted to repeal the estate tax, the outlook for action on the measure this year in the Senate is clouded. Hobbled by its inability to limit debate, the upper house is known to have trouble moving tax bills except as part of a budget reconciliation package.

Moreover, Senate Republicans seem to be willing to hold off on major tax legislation this year, in the hope that George W. Bush will win the presidency in November. Bush supports repeal of the estate tax.

Yet passage in the lower house is a strong indication that the estate tax may be doomed. The 279-136 vote was impressive -- two more votes than needed to override the veto threatened by President Clinton. No Republican opposed the bill and 65 Democrats, including Hawaii's Neil Abercrombie and Patsy Mink -- 31 percent of the Democratic caucus -- voted for it.

Even some members of the Congressional Black Caucus voted for repeal because of the efforts of the National Black Chamber of Commerce and other minority business groups that view the law as a barrier to building wealth in their communities.

The bill would phase out the combined tax on gifts (assets given during a taxpayer's lifetime) and estates (assets transferred at death). Currently the combined rate begins at 18 percent on the first $10,000 in assets transferred and reaches 55 percent for assets over $3 million.

The threshold for estates subject to taxation was raised in 1997 from $600,000, increasing to $1 million by 2006. Another provision gave an additional exemption to family farms and closely held family businesses, raising their threshold to $1.3 million.

The estate tax dates back to 1916 and was aimed at stemming the consolidation of giant fortunes. But it has had the unintended effect of forcing the sale of farms and other small family businesses.

Opponents contend that owners of small businesses and farmers continue to be victimized. They argue that the wealthiest families, with estates worth more than $20 million, have an easier time structuring their assets to avoid the tax.

The best outcome might be not outright repeal but further raising of the tax threshold and other revisions. Clinton, in a letter to House Speaker Dennis Hastert, said he supported legislation to make the estate tax "fairer, simpler and more efficient."

An alternative offered by Democrats would lower estate tax rates and increase from $1.3 million to $4 million the worth of an estate that would be exempted from taxes if it were part of a family farm or a closely held family business. Some such compromise seems more likely to become law -- and more responsible -- than outright repeal.

Published by Liberty Newspapers Limited Partnership

Rupert E. Phillips, CEO

John M. Flanagan, Editor & Publisher

David Shapiro, Managing Editor

Diane Yukihiro Chang, Senior Editor & Editorial Page Editor

Frank Bridgewater & Michael Rovner, Assistant Managing Editors

A.A. Smyser, Contributing Editor

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