Martha E. Mangelsdorf

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Look for higher executive salaries once companies adjust to Section 89 of the Tax Reform Act. Under Section 89, which goes into effect next January, companies must show whether their health and welfare plans favor highly paid workers, who will face taxes on extra perks. Rather than redo their plans to eliminate favoritism, many companies will compensate executives for the additional tax bite, says Chuck Sherfey of Mercer Meidinger Hansen Inc. Indeed, the government is counting on it: the IRS expects to take in an extra $494 million by 1991 because of noncompliance, notes John Egner of The Johnson Cos., another benefits firm.