THE LATEST FROM TAX HELL

“When you took a look at state taxes [January’s “The Taxes You Can No Longer Ignore”] with one eye closed, you missed the big picture. Here’s what you overlooked: Oregon collects less in state and local taxes for each of its citizens than does Washington State, the “tax haven” just beyond our borders. If you had done the work of a careful critic, that picture of Mount Hood would have been wearing a halo, not sporting a pitchfork.”

– Neil Goldschmidt, Governor of Oregon

The per capita figures to which Governor Goldschmidt refers include corporate income taxes and other business levies that individuals don’t pay. MONEY’s study dealt primarily with the two state taxes that weigh most on the individual: income and sales taxes. Looking at those levies, on a per capita basis. Oregon collects more revenue than does its northern neighbor: $537 for each of its citizens vs. only $322.50 in Washington.

“Your article on state taxes was well done. After two months of deliberation, my wife and 1 chose to live in Oregon, which, as you point out, is a “hell” state as far as taxes are concerned. I thought you might be interested to hear how we beat much of the tax: we selected a rural area that has all of the police, fire and school benefits of a city. Living in the country has cut our property taxes considerably. Also, in Oregon, if you own at least five acres and have cattle, Christmas trees or another crop that grosses at least $500 a year, you get a special waiver that cuts your taxes almost in half.

One of the great problems in Oregon is reckless and complacent spending by bureaucrats. On the other hand, Washington, which you call a tax haven, watches its taxpayers’ money judiciously.”

– Dave Golub, Oregon City. Ore.

JUNK FUND JITTERS

“When prices of junk bond funds started to decline in late 1988, I assumed the downturn was a temporary disruption caused by the well-publicized problems of [bond underwriter] Drexel Burnham Lambert and a few junk issuers, such as Campeau. I did not sell my fund because I felt it was a matter of time before high yields would entice investors back into the junk bond market and drive up prices.

Your January article “Why Junk Funds Face New Losses” was enough, however, to convince me to cut my tosses and bail out now. I had not realized that funds do not “mark to market” all of their holdings [carry securities on their books at current market value] and that, as a result, my fund could have some additional losses now that it has not yet recognized.”

– Marie-Claire Brien, New York City

“Why run an article warning of the risks of investing in junk bond funds now and yet include two such funds (Kemper High Yield and Fidelity High Income) on your recommended list in Fund Watch each month?”

– Luther W. Atkins, Bellaire, Texas

Money includes two high-yield bond funds in its recommended portfolio to help investors so inclined to make reasonable choices in the troubled $28 billion category. The funds are chosen on the basis of their comparably sound five- and 10-year risk-adjusted records rather than their shorter-term performances. We also actively monitor all funds on the list.

BY POPULAR DEMAND

► Money received several thousand inquiries last year from readers requesting the phone number of one mutual fund or another. Since most fund companies maintain toll-free lines, the easiest way to get a number is to call the national toll-free directory (800-555-1212).

► More than two dozen readers in recent months have asked how they can identify mutual funds and corporations that invest according to socially conscious guidelines. One newsletter that can help is Franklin’s Insight: Investing for a Better World (711 Atlantic Ave., Fifth floor, Boston, Mass. 02111; 800-5485684; $19.95 a year).

► Since the publication of the Fall 1989 Retirement Guide, several readers have asked how to reach Leonard Shapiro, the crusading publisher of L.A. Observer, a monthly newsletter that reports on the activities of local politicians. His vital statistics: 10418 Yarmouth Ave., Granada Hills, Calif. 91344: 818-368-9002.

CORRECTIONS

► The December Tax Letter mistakenly stated the rules for writing off casualty losses. Tax law allows deductions only up to the original cost of your property, plus the cost of pre-disaster improvements.

► A comment in the February 1990 story “Great Moves to Make Your Savings Grow” was incorrectly attributed to John Connolly, senior vice president of equity research at Dean Witter. Connolly believes that interest rates will drop as much as one percentage point by summer and remain low for the rest of the year.

Address letters to Money, Time & Life Building, Rockefeller Center, New York, N.Y. 10020.