66-236 DECEMBER 1971 Printed for the use of the Committee on Banking, Housing and U.S. GOVERNMENT PRINTING OFFICE WASHINGTON: 1972 COMMITTEE ON BANKING, HOUSING AND URBAN AFFAIRS JOHN SPARKMAN, Alabama, Chairman WILLIAM PROXMIRE, Wisconsin HARRISON A. WILLIAMS, JR., New Jersey DAVID H. GAMBRELL, Georgia JOHN G. TOWER, Texas WALLACE F. BENNETT, Utah WILLIAM V. ROTH, JR., Delaware BILL BROCK, Tennessee DUDLEY L. O'NEAL, Jr., Staff Director and General Counsel STATEMENT OF THE CHAIRMAN During consideration of legislation to clarify the liability of National banks for certain taxes (Public Law 91-156, approved December 24, 1969), the Committee was particularly concerned about the effect that possible increased intangible personal property taxation of banks may have on the banking systems. The Committee's concern arose because of the uncertainty about the magnitude of the impact of the sudden imposition of additional such taxes on banks. Accordingly, the Committee required, in Section 4 of Public Law 91-156, that ". the Board of Governors of the Federal Reserve System shall make a study to determine the probable impact on the banking systems and other economic effects of the changes in existing law to be made by Section 2 of this Act governing income taxes, intangible property taxes, so-called doing business taxes, and any other similar taxes which are or may be imposed on banks. . . .” The Board completed its study in April 1971. The study contained three parts. Part I contained the recommendations of the Board of Governors. Part II contained a Federal Reserve Board staff study covering the following subjects: (1) The history and effects of Section 5219, Revised Statutes (12 U.S.C. 548). (2) The amounts of State and local taxes paid by commercial banks and potential changes in their taxes under the new legislation. (3) The economic and legal background of the study. (4) Views expressed by the bankers, State tax administrators and State bank supervisors in the course of the study. (5) Major issues that require examination. (6) Possible alternative methods of dealing with the issues. Part III contained the supporting documentation in considerable detail on the topics covered in parts I and II. Parts I and II were transmitted by the Board to the Committee in late April and in May and were included in a committee print entitled "State and Local Taxation of Banks." Part III of the study, which the Committee has now received, is contained in this committee print. The entire study made by the Board, along with the Board's recommendations, are to be carefully considered by this Committee to determine what if any Federal legislation may be needed in the area of taxation of national banks. John Sparkman JOHN SPARKMAN |