WATERBURY, CONN., February 23, 1951.

Hon. JAMES T. PATTERSON, M. C.,

House Office Building:

I vigorously oppose Treasury Secretary's unconstitutional proposal to tax interest State and municipal bonds and securities. Please advise members Ways and Means Committee and assist in defeating measure.

RAYMOND E. SNYDER, Mayor.

CITY OF PLAINFIELD, N. J.,

February 14, 1951.

Hon. CLIFFORD P. CASE,

House Office Building, Washington, D. C. DEAR CONGRESSMAN CASE: I am advised that Congress has been presented with a proposal that future issues of State and municipal bonds be subjected to Federal income taxation. Apart from the questionable legality of such action without a constitutional amendment, I am opposed to such a measure and the matter of policy, and because of the effect it would have on the city of Plainfield.

In order to expand our school system to meet the needs of a growing school population we will, in the near future, be floating additional bonds. We also need to undertake a major sanitary sewer project which will require a further issue. Due to the fine financial standing of our city our last bond issue for school purposes in 1950 requires us to pay interest at only 11⁄2 percent. The passage of such an act as is proposed would undoubtedly increase our rate of interest at least to 2% percent. The burden would fall on the real property owners of our city who are already burdened because of the narrow base of taxation for municipal purposes. Although our budget is not finally passed it is anticipated that our tax rate will be approximately 10 percent higher than last year and the brunt of its increase, of course, falls on real estate.

May I ask that you use your good offices to oppose this proposal and to defeat it if it comes out of committee on the floor of the House.

House of Representatives, Washington, D. C.

DEAR CONGRESSMAN DOUGHTON: I am enclosing herewith, six communications I have received from town and city officials in the State of Connecticut in regard to the taxing of State and municipal bonds, for insertion in the printed hearings of your committee, so that their views may go on record.

I have been advised by your office that these would be accepted up until March 21.

Very sincerely yours,

WILLIAM BENTON,
United States Senate.

TOWN OF FARMINGTON, CONN.,

February 28, 1951.

Hon. Senator WILLIAM BENTON,

State Office Building, Hartford, Conn.

DEAR SENATOR BENTON: Enclosed is a resolution which was passed by the Farmington Town Council at its regular meeting of February 27, 1951.

Very truly yours,

ROBERT D. HEITSCH,
Town Manager.

TOWN OF FARMINGTON, FARMINGTON, CONN.

Whereas the Ways and Means Committee of the House of Representatives is to consider the taxing of income from State and municipal bonds; and

Whereas the town of Farmington, like many other municipalities in Connecticut, is contemplating the issuance of muniicpal bonds and intends to use the income therefrom for certain public benefits; and

Whereas such bonds are now readily salable because of the low rate of interest presently attached to such loans and because the income from such bonds is nontaxable; and

Whereas if the income from such bonds is subject to Federal taxation the public good will suffer because of the additional cost and expense to the taxpayer: Now, therefore, be it

Resolved, That the Town Council of the Town of Farmington, Conn., at a meeting duly held on February 27, 1951, does hereby voice its strenuous objection to the suggestion of the Ways and Means Committee of the National House of Representatives that the income from State and municipal bonds be subjected to Federal taxation; and be it further

Resolved, That a copy of this resolution be forwarded to Senators Brien McMahon and William Benton and to Congressman at Large Antoni Sadlak and Congressman A. A. Ribicoff.

Certified from record.

W. SPENCER HURLBURT,

Town Clerk.

Hon. WILLIAM BENTON,

CITY OF HARTFORD, Hartford 4, Conn., February 21, 1951.

Senate Office Building, Washington, D. C.

DEAR SENATOR BENTON: Please be advised that the city of Hartford, Conn., is opposed to any legislature attempting to impose Federal taxation upon the income from State or local municipal bonds.

While a communication has been sent to Mr. Doughton, chairman of the House Ways and Means Committee advising the committee, of the official position of the city, your interest in seeing that such legislation is not enacted by the Congress will be appreciated.

Sincerely yours,

Hon. WILLIAM Benton,

C. F. SHARPE, City Manager.

CITY OF NEW BRITAIN,

New Britain, Conn., February 21, 1951.

United States Senator, Washington, D. C. MY DEAR SENATOR: We hereby strongly urge that you oppose the proposal to repeal the exemption of State and municipal bonds from Federal taxation.

Such proposal would, in our opinion, seriously affect the finances of our State, county, and city governments. We believe also that it should be opposed because of the constitutional implications which the proposal holds for State sovereignty and local self-government.

Yours truly,

Senator WILLIAM BENTON,

WEST HARTFORD TOWN COUNCIL,

West Hartford, Conn., February 16, 1951.

United States Senate, Washington, D. C.

DEAR SIR: At a meeting of the town council held February 13 it was voted to recommend to the House Ways and Means Committee that State and municipal bonds continue to be exempt from Federal taxation, and to ask your help toward

that end.

Very truly yours,

79120-51-pt. 2—39

ANNIS R. MERRILL,
Clerk of Council.

Hon. WILLIAM BENTON:

NEW LONDON, CONN., February 23, 1951.

The city of New London, Conn., vigorously protests Treasury Department proposal re Federal taxation of municipal bonds. Detriment to all local taxpayers will greatly exceed Federal benefit. Passage would make impossible or extremely difficult necessary local projects such as sewerage, schools, etc. Strongly urge your opposition to proposal.

Hon. WILLIAM A. BENTON,

EDWARD R. HENKLE, City Manager.

CITY OF STAMford, Conn., February 19, 1951.

United States Senate, Washington, D. C.

DEAR MR. BENTON: The purpose of this letter is to urge you to give the most serious consideration possible, to the evil effects of the proposed bill, which will allow the Federal Government to tax the bonds and notes of local communities. I think that this is the most flagrant attack upon the authority of the individual municipalities, that has ever been made. It is an invasion of the rights and will break down the morale of our local communities.

It is a very definite step toward controlling the finances of our local communities. I doubt if you will find many communities in this country whose financial affairs are as badly managed as those of the United States Government. I think it is serious and dangerous to allow any legislation which will permit the Federal Government to tax the securities of our towns, cities, and States.

Cordially yours,

GEORGE T. BARRETT, Mayor.

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CRANSTON OPPOSING THE PROPOSED FEDERAL TAXATION OF THE INCOME FROM MUNICIPAL BONDS

Passed, February 26, 1951.

No. 39

Approved, February 28, 1951.

HOYT W. LARK, Mayor.

Resolved, That whereas the proposal has been made that the United States Congress amend the Federal income-tax law so as to subject the interest paid on municipal bonds to the Federal income tax payable by the holders of such bonds; and

Whereas such proposal constitutes a direct trespass on the time-honored line of demarcation between the powers of the Federal Government, on the one hand, and the powers of the States and municipalities, on the other hand; and

Whereas the imposition of the Federal income tax on the interest paid on munici pal bonds would seriously affect the credit of municipalities in general and the city of Cranston in particular:

Now, therefore, be it

Resolved, That the city council of the city of Cranston, R. I., does hereby express its unalterable opposition to the proposal above-mentioned, and that the city clerk be and he hereby is authorized and directed to transmit a certified copy of this resolution to each United States Senator and each Representative from the State of Rhode Island, to the President of the United States Senate, and to the Speaker of the United States House of Representatives.

Witness:

A true copy.
Attest:

[SEAL]

ERNEST L. JOHNSON, City Clerk.

ERNEST L. JOHNSON, City Clerk.

CITY OF EVERETT, Mass.

BOARD OF ALDERMAN

FEBRUARY 12, 1951.

RESOLUTION OFFERED BY JOHN J. Butler, Jr., Alderman

Whereas it has been proposed to the Congress of the United States that future issues of State and municipal bonds be subjected to Federal income taxation; and

Whereas the removal of the tax-exemption feature would disturb the marketability of such bonds; and

Whereas this would necessitate an increase in the interest rate; and

Whereas such an increase would result in an additional cost to the taxpayers of States and cities; and

Whereas there is a grave doubt as to the constitutionality of such a measure; Therefore be it

Resolved, That the mayor and city council of the city of Everett do hereby express our opposition to any proposed bill calling for the levying of a tax on State and municipal bonds.

February 12, 1951: Passed in board of alderman.

February 19, 1951: Passed in common council.
February 28, 1951: Approved:

A true copy.

Attest: [SEAL]

Hon. ROBERT L. DOUGHTON,

PHILIP J. CROWLEY, Mayor.

JOHN M. CARROL, City Clerk.

HOUSE OF REPRESENTATIVES, Washington, D. C., February 26, 1951.

Chairman, Committee on Ways and Means,

House of Representatives, Washington, D. C.

MY DEAR MR. DOUGHTON: I am attaching resolutions of the Senate and House of the State of Montana and copies of two letters having to do with the taxation of interest on State and municipal bonds, the subject of your hearings today and tomorrow.

Each expresses opposition to the proposal to tax these securities. In the letter signed by Mayor W. Gilbert Lowe, of the city of Bozeman, Mont., you will find described the reaction of a typical Montana city government. Mr. M. E. Henderson expresses similar opinions on behalf of the Montana cities and towns that are members of the Montana Municipal League, of which he is president.

I will appreciate it if you will have this letter, the Senate and House resolutions, and the letters of Mayor Lowe and Mr. Henderson included in the record of your hearing as evidence of the position of the State and local governments of Montana. Very truly yours,

Hon. W. A. D'EWART,

WESLEY A. D'EWART.

THE MONTANA MUNICIPAL League,
Bozeman, Mont., February 21, 1951.

Congressman from Montana, Washington, D. C.

DEAR SIR: We are informed that a hearing is to be held before the Ways and Means Committee of the House of Representatives on February 26, 1951, on a proposal to make all municipal bonds or the income therefrom subject to tax by the United States Government.

The Montana Municipal League represents more than 90 of the 120 incorporated cities and towns in Montana. There is not time to secure individual expressions from each of those cities and towns but we know that we express the unanimous opinion of all of them in presenting this as a definite protest against any proposal to impose a tax on the income from municipal bonds.

Imposition of such a tax could only result in increasing the interest rate on all municipal bonds with the end result of increasing the load of Federal tax for every citizen of every town and city. Certainly every citizen should pay his fair share of Federal tax but the fact that a citizen lives in a city or town should under no circumstances be a reason for requiring him to pay more than his share.

Further than the unfairness of the tax, the proposal as it has been presented to us, would strike at the very root of basic rights of cities and towns for their self-government or home rule granted by the Constitution of the United States in the sixteenth amendment thereto.

Time does not permit adequate preparation of argument against this proposal. We are informed that there will be representatives at the hearing to present further argument in detail but we earnestly request you to make known to the House Ways and Means Committee that all Montana cities and towns are definitely opposed to any measure which would impose Federal tax on municipal bonds or the income for such bonds.

Respectfully yours,

Hon. WESLEY A. D'EWART,

United States House of Representatives,

House Office Building, Washington, D. C.

M. E. HENDERSON, President.
FEBRUARY 23, 1951.

DEAR CONGRESSMAN D'EWART: It has come to the attention of the administration of this city that on February 5 Secretary of the Treasury Snyder testified before the House Ways and Means Committee to the effect that the exemption of State and municipal securities from Federal taxation should be removed and such securities be made subject to Federal income tax. We are advised that the committee will have a hearing on this proposal on February 26, 1951, and I hasten to write you concerning this matter in hopes that we may enlist your aid in opposition to this proposal.

In a quotation from Secretary Snyder's testimony, he makes a masterful understatement to the effect that the removal of the exemption of State and municipal securities "would increase to some extent the cost of future State and local borrowing." It seems to me that this statement exemplifies a startling lack of knowledge or misrepresentation of the facts from a Cabinet officer.

The plain facts of the case are that if this exemption is removed, every issue of municipal securities will bear a greatly increased interest rate and the burden will be passed on to the taxpayers of our States and municipalities, who are already carrying a terrific load of Federal taxation. Such action would greatly retard vital improvements in States and municipalities by making the cost thereof in some cases at least prohibitive.

In addition to the above increased cost and taxation factors, we are greatly concerned over the constitutional implications of this proposal. In the last few years we have seen the functions, powers, and privileges of States and municipalities constantly encroached upon by the Federal Government. Home rule is becoming less and less of a reality so that we wonder if our children will even know what such an institution was. This proposal, if enacted into legislation, will again impose the will of a strong and paternalistic Federal Government upon States and municipalities and we are unalterably opposed to such action.

Speaking for this city, this will advise you that we are very much concerned with Secretary Snyder's proposal and very much opposed to the same. We would appreciate it if you, as a member of the congressional delegation from this State would make our position in this matter known to the committee, and for that purpose I am enclosing herewith two extra copies of this letter.

Somewhat parenthetically, I might add that if the Federal Government would make a conscientious effort to live within its income, as this city has to do by law, it would not be necessary to impose this additional tax burden upon the citizens of Montana and the other States of this Nation.

Respectfully yours,

W. GILBERT Lowe, Mayor.

SENATE RESOLUTION

INTRODUCED BY MAHONEY AND MANNING

A Resolution of the Senate of the State of Montana to the Congress of the United States of America and to the Honorable James E. Murray and Zales N. Ecton, United States Senators from Montana, and to the Honorable Mike Mansfield and Wesley A. D'Ewart, Representatives in Congress from Montana, requesting that the bonds of all States and political subdivisions and the income from said bonds be exempt from taxation

Whereas the State of Montana and its poltical subdivisions have issued and will issue bonds for the purpose of constructing necessary buildings for public use and purposes; and

Whereas the school districts of the State of Montana are in dire need of capital expenditures financed by bond issues to meet the increased enrollment in the schools of this State; and