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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 hy 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, House of Representatives, House Office Building,
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:
E. A. DUFFY,
CITY OF MIAMI, FLA.
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 ciiy of Miami, Fla., this 22d day of
F. L. Correll, City Clerk.
CITY OF PATERSON, N. J., February 21, 1951. Hon. ROBERT L. Doughton, 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 I 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, Executive Director, United States Conference of Mayors,
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. Pact, City Auditor.
CITY OF FORT WAYNE, IND., February 20, 1951. Hon. ROBERT L. DOUGHTON, Chairman, House Ways and Means Committee,
House Office Building, Washington, D. C. DEAR SIR: The city of Fort Wayne operates three public utilities, water, electric light and power, and sewage disposal. During the recent war, World War II, which is still recent, repairs and additions to these municipally owned utilities had to be postponed because of economic conditions.
Public necessity now calls loudly for these improvements. This condition confronts almost every city in the Nation and practically every city is faced with the question, “How can such improvements be financed?” The obvious, and only, answer is: By the sale of municipal bonds.
The maintenance of such utilities is as important a part of our national defense as any other activity.
The policy of one unit of government drawing its sustenance from another unit of government has for a long time presented a constitutional question; at this grave hour in the affairs of our Nation it would most certainly be a serious economic mistake.
As the representative of the people of this city, I most sincerely urge you to oppose a proposed bill for the taxation of municipal bonds, which comes up for hearing before your committee on February 26. Respectfully yours,
HENRY E. BRANNING, Jr., Mayor, City of Fort Wayne, Ind.
CITY OF Des Moines, Iowa, February 7, 1951. Hon. ROBERT L. DOUGHTON, Chairman, House Ways and Means Committee,
House Office Building, Washington, D. C. DEAR CONGRESSMAN DOUGHTON: I note, with a great deal of interest, that there has again been presented to the House Ways and Means Committee a proposal for the Federal Government to tax municipal bonds and securities.
This proposal has been the subject of bitter protest on the part of cities in preceding years, and I sincerely hope that the House Ways and Means Committee will not, in this time of emergency, recommend a tax on municipal bonds and securities.
Cities throughout these United States are having a difficult time in meeting their obligations as it is, without having to pay the increased cost of Federal taxes on their securities.
I am sure I represent the thinking of officials in my own city, and as president of the International City Managers Association, I am quite sure that the sentiment here expressed is the general thinking of officials in city manager cities throughout the United States. Sincerely yours,
LEONARD G. HOWELL, City Manager.
CITY OF PEORIA, ILL., February 16, 1951. Hon. Noah M. Mason, House of Representatives,
House Office Building, Washington, D. C. Dear Sir; I am informed that as a member of the House Ways and Means Committee, you are familiar with proposed legislation which would make State and municipal securities taxable. They are, of course, at this time tax-exempt. I understand that hearings are being initiated before this committee on this question.
I want to call to your attention a fact of which you, no doubt, already have some knowledge, of the sad financial plight of cities and other municipalities, not only in Illinois, but throughout the Nation. You also must be familiar with the meager means of increasing revenue that cities and villages have in Illinois. Most cities, including the city of Peoria, must constantly resort to a form of financial ingenuity in order to maintain itself on a going basis.
Federal taxation on income and interest from municipal securities now taxexempt would almost constitute the last straw.
At the present time, the city of Peoria happily is able to issue certain types of warrants and bonds at a very favorable rate of 2 percent interest. I am informed by competent authorities that if these securities become taxable, this interest rate would be at least double or more.
1, therefore, believe it my duty to inform you that we strongly oppose any such. legislation, and trust that you will see fit to follow our suggestion. Sincerely yours,
JOSEPH 0. MALONE, Mayor.
CITY OF CAMBRIDGE, Mass., February 8, 1951. To Members of the House Ways and Means Committee:
DEAR SIRS: My attention has been invited to the fact there is a proposal before the Congress that future issues of municipal bonds are going to be subject to Federal income taxation.
I believe this is a most unjust tax, because certainly nowhere in the Constitution or the amendments is there anything which would indicate Congress had a right to tax cities and States, and when you tax the bonds of these you are taxing the cities and States.
Our city treasurer has made a careful study of this and informs me where we are able at the present time to borrow money at 1/4 to 144 percent, we will be obliged to pay at least 24 percent if these bonds are taxable.
Our city now carries a large burden of tax-exempt Federal property here, and we render to all the same facilities which we do to buildings paying taxes—ample police and fire protection, health protection for their employees, schools for the children of the employees, and everything a good municipality can do is done, and done with pleasure, for the Federal Government. I find it difficult to feel that the gratitude for these services would come in the form of greatly increasing our annual expenses.
One of the principal reasons that this country abounds with good schools, municipal hospitals, recreation buildings, and other municipal facilities is because these have been able to be financed at low cost, and these bonds have been readily salable.
These are important items which I hope you will bear in mind when this matter comes before you, and also bear in mind this has been before several other Congresses, but in each instance these Congresses have acted wisely and refrained from loading up the cities with additional expenses. I hope you will give this bill the same treatment as other Congresses. Very truly yours,
John B. ATKINSON, City Manager.
City of Youngstown, OHIO, February 6, 1951. Congressman Thomas A. JENKINS,
House Office Building, Washington, D. C.: I am opposed to the administration proposal to remove exemption from Federal taxation of future issues of municipal bonds. This would make increasingly difficult local financing of municipal projects and compel cities to rely more heavily upon Federal funds. If Ways and Means Committee contemplates serious consideration of proposal, would like opportunity to testify.
CHARLES P. HENDERSON,
Mayor, City of youngstown.
City of YOUNGSTOWN, Ohio, February 7, 1951. Congressman Thomas A. JENKINS,
House Office Building, Washington, D. C.: Since my own wire of yesterday, executive committee of Association of Ohio Municipalities has authorized me to voice strong opposition of association to proposed Federal tax on municipal bonds. It is quite apparent from statements of heads of other Ohio municipalities that Federal taxation of city bonds would be most serious blow to local governments.
Mayor CHARLES P. HENDERSON, President, Association of Ohio Municipalities.