issues of municipal securities and may lead to the taxation of all outstanding bonded indebtedness of municipalities. Such action will be a backward step and constitute impairment of constitutional sovereignty of the State and its political subdivisions. In addition to invading the constitutional rights of sovereignty, it will place directly upon the individual taxpayers a burden that they cannot stand without the possibility of converting real estate as an asset into a liability. I am sure you are quite familiar with the financial plight of municipalities, and especially in Tennessee. They are struggling for their very existence, and it is now difficult for them to find any new sources of revenue that can be made available to meet the growing increase in the services. The tendency and the trend apparently is all directed toward siphoning away from local governments into the Federal Treasury many sources of tax revenues that should be available for operation of the political subdivisions. In effect, such an unprecedented move as suggested by Treasurer Snyder would simply be increasing the burden on local taxpayers and transferring resultant income to the Federal Treasury to the detriment of the taxpayers of the State and its political subdivisions. We sincerely trust that you will throw the full weight of your effective opposition to any such move, and should this proposal reach the point of serious consideration we shall appreciate your efforts in arranging for our city to be heard before any committee consideration. Very respectfully yours, Hon. ROBERT W. KEAN, J. W. Elmore, Jr., Mayor. CITY OF CAMDEN, N. J., February 21, 1951. House Office Building, Washington, D. C. MY DEAR CONGRESSMAN KEAN: Enclosed find certified copy of resolution adopted by the Board of Commissioners of the City of Camden (its governing body) opposing the proposition of the Secretary of the Treasury in which he advocates that future issues of municipal bonds and securities be subject to Federal taxation, and which matter I understand is to be considered by the House Ways and Means Committee on February 26. We respectfully urge you to reject the Secretary's proposal. It will be appreciated if you will submit this resolution into the record of your committee hearing. Respectfully yours, GEORGE E. BRUNNER, Mayor. CITY OF CAMDEN, N. J. Whereas the Secretary of the Treasury has proposed to the Ways and Means Committee of the House of Representatives that future issues of State and municipal bonds and securities be subject to Federal taxation; and Whereas such proposition would materially affect the borrowing ability of municipalities and would result in a substantial increase in the interest rates which municipalities would have to pay on their future borrowings, which in many instances would be double the rate they are paying at the present time; and Whereas we believe such proposition would result in increasing the cost of local government and that such increased cost would necessarily be transmitted directly to the local taxpayers; and Whereas such proposition strikes at the very foundations of our system of government, which has preserved the immunities from taxation between Federal and State Governments, which immunities have been defended repeatedly by the courts and Congress heretofore: Now, therefore, be it Resolved by the Board of Commissioners of the City of Camden, N. J., That it hereby records its disapproval of such proposition and strongly urges Congress to reject said proposal; and be it further Resolved, That certified copies of this resolution be forwarded to the Members of Congress from this State. Dated February 21, 1951. CITY CLERK'S OFFICE CAMDEN, N. J. I, Mary K. MacClennan, deputy city clerk of Camden, N._J., do hereby certify that the foregoing is a true copy of a resolution opposing Federal taxation of municipal bonds passed by the Board of Commissioners of Camden, N. J., the 21st day of February A. D. 1951, as taken from and compared with the original now on file in my office. IN TESTIMONY WHEREOF, I have hereunto set my hand and seal of the city of Camden, at Camden, this 21st day of February A. D. 1951. DEAR CONGRESSMAN: This is to advise you that the City Council of the City of Omaha, in regular session February 13, 1951, did, by unanimous vote, adopt a resolution objecting to the proposed legislation which would allow for Federal taxation of future issues of municipal bonds. Those of us concerned with financing on the local level are already suffering immeasurably and find it extremely difficult to survive because of the high cost of providing public services, due to inflation. Unlike our State and National Governments, we cannot increase our tax levy because that levy is fixed by State law and cannot be increased except by vote of the people. It should be evident to all that our people will not approve an increased levy simply because we need more money to continue existing services. This is not true in the case of Federal and State Governments. They have no ceiling on their income and may increase it whenever or wherever they desire. With such problems as these facing us today, if would be impossible to carry this burden if expenses were further increased because of the proposed Federal tax on our bond issues. If such a tax were added, our interest charges would increaseit's as simple as that. Trusting you will do all in your power to stop the proposed legislation which comes before the House Ways and Means Committee on Monday, February 26, I am. Very truly yours, GLENN CUNNINGHAM, Mayor. CITY OF YONKERS, N. Y. RESOLUTION Whereas on February 5, 1951, the Secretary of the United States Treasury proposed to the House Ways and Means Committee that the income from State and municipal securities, now tax-exempt, be subjected to Federal income taxation; and Whereas the comptroller of the city of Yonkers, concurring in the opinion of municipal finance officers and municipal law officers generally, has advised this common council that said proposal would inevitably adversely affect the marketability of municipal securities by depriving them of their historic attractiveness to the investing public because of their exemption from taxation, and that said proposal would necessarily increase interest rates on such municipal securities from approximately 1 percent upward, thus nearly doubling the cost of borrowing money to many cities and other municipalities; and Whereas the increased interest costs of municipal securities resulting from said proposal will necessarily fall upon the already heavily burdened owners of real property, which is the principal source of revenue upon which the city of Yonkers and other municpalities must rely to meet the costs of essential governmental functions; and Whereas the corporation counsel of the city of Yonkers, concurring with the opinion generally held by municipal law officers-that the taxation of income from State and municipal securities constitutes an unconstitutional burden upon the sovereignty of State and municipal governments because the adverse effect of said proposal upon the borrowing powers of State and municipal governmentsis definite and certain in that it will increase interest costs and increase the burden of local taxation upon real-property owners, and, therefore, violates the constitutional doctrine of reciprocal sovereign immunity enunciated by the Supreme Court of the United States over 130 years ago, and violates the clearly expressed intent of the Congress of the United States and of the several States in adopting the sixteenth amendment to the Federal Constitution that the power of Congress to lay and collect taxes on incomes by virtue of said amendment was not intended and could never apply to the obligations of State and municipal governments and did not authorize any additional burden on the several States in the exercise of their sovereign rights; and Whereas this common council is advised that said proposal violates the constitutional doctrine affirmed by the United States Supreme Court over a period of more than 40 years that the borrowing powers of the States and political subdivisions thereof cannot be impaired by Federal taxation: Now, therefore, be it Resolved, by the Common Council of the City of Yonkers, in meeting assembled, That in consideration of the preambles hereof this common council hereby records its unalterable opposition to the proposal of the Secretary of the United States Treasury to subject the income from State and municipal securities to Federal income taxation as a direct unconstitutional and unwarranted assault upon the power and capacity of the city of Yonkers and of all other municipalities and of the State of New York to borrow money for the financing of their essential governmental functions; and be it further Resolved, That certified copies of this resolution be forwarded by the city clerk to the chairman and members of the House Ways and Means Committee, the National Institute of Municipal Law Officers, the United Sttates Conference of Mayors, and also to Senators Irving M. Ives and Herbert H. Lehman and to Congressman Ralph W. Gwinn, as evidence of this common council's opposition to said proposal and of its expectation that the Congress of the United States refuse to enact said proposal into law. FEBRUARY 27, 1951. CITY OF HARTford, Conn., February 21, 1951. Hon. ROBERT L. DOUGHTON, Chairman, House Ways and Means Committee, Washington, D. C. DEAR SIR: The city of Hartford, Conn., wishes to formally protest any action by the United States Congress which would result in the taxation by the Federal Government of municipal bonds. I understand that there is a hearing on this question set for Monday, February 26. Cities throughout the country are having their own difficulties keeping pace with inflation. To impose taxation of the nature under consideration upon municipal bonds would further increase the burden of local taxation. We believe that the principle establishing the exemption of State and municipal bonds from Federal taxation has been well established. Therefore, we urge you and your committee to consider the plight of the cities and to refrain from any program that would place an additional burden upon local government. Your sympathetic understanding will be appreciated. Sincerely yours, C. F. SHARPE, City Manager. CITY OF RICHmond, Va. A RESOLUTION NO. 51-R14-TO CONDEMN PROPOSED LEGISLATION OF THE CONGRESS OF THE UNITED STATES IMPOSING TAXES ON INCOMES DERIVED FROM STATE AND MUNICIPAL SECURITIES (Adopted February 12, 1951) Whereas it has been brought to the attention of the council of the city of Richmond that the Congress of the United States of America is now considering the adoption of legislation imposing taxes on incomes derived from State and municipal securities; and Whereas such a tax will be reflected in substantially higher interest rates upon bonds issued by the States and their municipalities, and such increase will result in substantially increasing the tax burdens of citizens of the States and municipalities issuing bonds; and Whereas such legislation will also tend to make the States and their municipalities and political subdivisions subordinate to the United States of America, and thereby do violence to the fundamental concepts upon which the National Government was founded: Now, therefore, be it Resolved by the council of the city of Richmond: 1. That it is the opinion of the council of the city of Richmond that no legislation should be enacted by the Congress of the United States of America taxing incomes derived from issues of State and municipal securities. 2. That certified copies of this resolution be sent by the city clerk to the Senators and Members of the House of Representatives of the Congress of the United States of America from Virginia, and to the members of the Ways and Means Committee of the House of Representatives, now considering such legislation. A true copy, teste: CITY OF MIAMI, FLA. E. A. DUFFY, RESOLUTION NO. 23157 A resolution requesting and directing the Congress of The United States of America to continue to allow municipal securities, bonds, self-liquidating certificates and other obligations of the city to be exempted from Federal taxation; and authorizing and directing that copies of this resolution be sent to the Members of Congress and to The United States Conference of Mayors Whereas the city of Miami is now enjoying its best financial period in its history in that city of Miami bonds and obligations have been sold for less than 2 percent per annum interest; and Whereas the sole reason the aforesaid interest rate is so low is because the income to the holders of said bonds is tax exempt; and Whereas if the Federal Government were to tax such municipal securities and obligations, the tax would merely be passed to the municipalities, which would pay for it in the form of higher interest; and Whereas the municipalities would have to sell their bonds at a higher rate of interest, and the public works improvements of inhabitants of the communities would be jeopardized, slowed down, and would probably stop completely: Now, therefore, be it Resolved by the commission of the city of Miami, Fla: Section 1. That the city commission does hereby protest to the Congress of the United States of America any attempted form of taxation upon municipal securities of any nature whatsoever, and it is hereby further urged that the Congress of the United States of America continue to allow the exemption for tax purposes on any municipal security. SEC. 2. That a copy of this resolution be forwarded to the members of the Florida delegation in both Houses of Congress and to the United States Conference of Mayors. Passed and adopted this 21st day of February 1951. STATE OF FLORIDA, County of Dade, City of Miami: I, F. L. Correll, clerk of the city of Miami, Fla., do hereby certify that the attached page contains a true and correct copy of a resolution passed and adopted by the commission of the city of Miami, Fla., at a meeting held on the 21st day of February 1951, and designated Resolution No. 23157. Witness my hand and the official seal of the city of Miami, Fla., this 22d day of February 1951. [SEAL] F. L. CORRELL, City Clerk. By H. D. SOUTHERN, Deputy City Clerk. Hon. ROBERT L. DOUGHTON, CITY OF PATERSON, N. J., February 21, 1951. Chairman of Ways and Means Committee, House Office Building, Washington, D. C. DEAR CONGRESSMAN: We are advised that there has formally been presented to the Congress the proposal that future issues of State and municipal bonds be subjected to Federal income taxation and the House Ways and Means Committee has scheduled hearings February 26, upon the question. Mayor Michael U. De Vita and the board of finance of the city of Paterson most strenuously oppose any attempt by the Federal Government to tax municipal bonds. There is no doubt that were this proposal reported favorably out of your committee and enacted into law by the Congress at least 1 percent interest will be added to interest charges for all future municipal bond issues. It also would open the way for Federal taxation of other municipal enterprises such as local water and power plants. Projects to be supported by the issuance of tax revenue bonds would be impossible if bond interest costs were increased. Your attention is also called to the fact that if taxation of future issues would be upheld the next step would be to tax presently outstanding obligations. So if bonds can be taxed, what is there to prevent taxing municipal water plants and other earnings and revenues. It is our responsibility as elected municipal officials to preserve and protect our democratic local institutions of government and as such we strongly advise and beseech you not to report favorably out of your committee this innocuous measure to tax municipal bonds by the Federal Government. Sincerely yours, HOWARD L. BRISTOW, Administrative Assistant to the Mayor. CITY OF JACKSONVILLE, FLA., February 20, 1951. Mr. PAUL V. BETTERS, Washington 6, D. C. DEAR SIR: There is enclosed copy of letter I have this day written to Representative A. S. Herlong, of Florida, regarding the proposal to remove income-tax exemption from all State and municipal bonds. A similar letter was sent to both of the Florida Senators and each of the Representatives. Yours very truly, J. E. PACE, City Auditor. CITY OF JACKSONVILLE, FLA., February 20, 1951. Hon. A. S. HERLONG, House Office Building, Washington, D. C. DEAR SIR: I have information from a reliable source that there has again been presented to Congress a proposal to remove income-tax exemption from all State and municipal bonds. To impose Federal income taxes on State and municipal securities will simply mean higher rates of interest and therefore a greater burden upon our States and their political subdivisions. It would also mean higher taxes for those who own real estate, as it is from this source that interest is paid and bonds are amortized and liquidated. It is only in cases where revenue certificates are sold that the nonowner of real estate has to pay his share of the bonds. I do not believe it is fair and equitable that additional penalties should be imposed upon those who are at the present time carrying the burden of taxation just in order to satisfy the general public with their demands of improvements for which only few have to pay. Should the exemption be removed it would be taking from each community money that should remain there for their own use. There seems to be no criticism of the present system from purchasers of securities sold by private enterprise; and I believe the only reason that has been advanced for a change in the law is a desire of certain officials in Washington to secure more revenue for use by the Government. My candid opinion is that if they will cut the present rate of spending greater benefits to the people as a whole would be the outcome. I, therefore, urge upon you to do everything within your power to defeat any effort that may be made in Congress to remove the income-tax exemption on State and municipal bonds. Yours very truly, J. E. PACE, City Auditor. |