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, Hon. ROBERT L. DOUGHTON, HENRY E. BRANNING, Jr., Mayor, City of Fort Wayne, Ind. CITY OF DES MOINES, IOWA, February 7, 1951. 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, Hon. NOAH M. MASON, House of Representatives, LEONARD G. HOWELL, City Manager. CITY OF PEORIA, ILL., February 16, 1951. 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. I, 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 O. 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 14 to 1% percent, we will be obliged to pay at least 21⁄2 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, CITY OF YOUNGSTOWN, OHIO, February 7, 1951. Congressman THOMAS A. JENKINS, 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. CITY OF GRAND RAPIDS, MICH. 93140 Whereas there has formally been presented to the United States Congress the proposal that future issues of municipal bonds be subjected to Federal income taxation; and Whereas it is the responsibility of all elected municipal officials to preserve and protect our democratic local institutions of government: Now, therefore, be it Resolved, That the city commission of the city of Grand Rapids, Mich., hereby takes official action in strenuously objecting to the proposed Federal taxation of municipal bonds; and be it further Resolved, That the city clerk be instructed to forward a certified copy of this resolution to all members of the House Ways and Means Committee. Adopted: Yeas-Commissioners Barto, Doerr, Gritter, Hannah, Haraburda (5); nays-0. I hereby certify that the foregoing is a true transcript of the action of the city commission of the city of Grand Rapids, Mich., in public session held Monday afternoon, February 19, 1951. [SEAL] Hon. ROBERT L. DOUGHTON, R. STANTON KILPATRICK, City Clerk. CITY OF SCHENECTADY, N. Y., February 8, 1951. Chairman, House Ways and Means Committee, House Office Building, Washington, D. C. DEAR CONGRESSMAN DOUGHTON: It is understood that your committee is presently considering the possibility of lifting the exemption privilege from municipal borrowing. Such a move would be disastrous from the municipal point of view. Our financing problem is extremely difficult and the additional cost involved if the exemption is eliminated would be a serious matter for us. As you know, the main source of our revenue is the real-estate tax, which in this area has reached the saturation point. Aside from the constitutional question involved, I would like to urge you, in the interest of a healthy municipal financial structure, to defeat the new proposal. Sincerely yours, CHRISTIAN X. KOURAY, City Manager. CITY OF PONTIAC, MICH., February 20, 1951. Whereas the proposal that future issues of State and municipal bonds be subjected to Federal income taxation has again been formally presented to the Congress; and Whereas the proposal would result in added expense and increased taxation to the cities sponsoring future bond issues; and Whereas it is the opinion of the city commission of the city of Pontiac, Mich., that home rule should permit it to control its own financing without interference from other levels of government: Therefore be it Resolved, That the city commission of the city of Pontiac, Mich., wishes to make it known to the members of the House Ways and Means Committee and the Senators and Representatives in the Congress representing this city that it is opposed in purpose and principle to Federal taxation of future issues of State and municipal bonds. STATE OF MICHIGAN, County of Oakland, ss: I hereby certify that the foregoing is a true copy of a resolution adopted by the Pontiac City Commission at a meeting held Tuesday, the 20th day of February A. D. 1951. Given under my hand and seal of the city of Pontiac, Mich., this 21st day of February A. D. 1951. Clerk of the City of Pontiac, Mich. CITY OF WINston-Salem, N. C., February 6, 1951. Congressman ROBERT L. Doughton, Washington, D. C.: Placing myself and the administration of the city of Winston-Salem on record as being unreservedly opposed to any action that would remove muncipal bonds from list that exempts them from Federal tax. Urgently request that you use your influence to prevent the carrying out of Secretary of the Treasury Snyder's proposal to House Ways and Means Committee that municipal bonds be made subject to Federal tax. Federal tax on municipal bonds would be detrimental to all municipalities because it would cause far-reaching effect on sales of these bonds. Ultimate effect would be increased costs to municipalities and the municipal taxpayer would have to bear the brunt of such action. MARSHALL C. KURFEES, CITY OF ROCKFORD, ILL., February 20, 1951. Hon. ROBERT L. DOUGHTON, Chairman, House Ways and Means Committee, MY DEAR MR. DOUGHTON: We feel that it would be unfair to the cities to impose a new Federal tax on municipal bonds. The financing problem of the cities is already stressed. Each year the city and the board of education issue several million dollars of tax anticipation warrants at a low rate of interest. If a Federal tax is invoked, the interest rate would have to be increased in order to make the warrants salable. Other bonds may from time to time also be necessary. This would cost the city and schools additional thousands of dollars that would have to be met by the local taxpayers. Therefore, in behalf of the city and its taxpayers we urge you to consider this matter, and we request that a Federal tax on municipal bonds be rejected. Very respectfully yours, C. HENRY BLOOM, Mayor of Rockford. CITY OF TRENTON, N. J. RESOLUTION PROTESTING TO THE CURRENT TREASURY DRIVE TO TAX STATE AND MUNICIPAL BONDS Whereas there has formally been presented to the United States Congress the proposal for future issues of State and municipal bonds to be subject to Federal income taxation, most municipal officials had assumed that this basic issue had been settled for a long time. On September 19, 1940, the Senate, by a vote of 44 to 30, and on October 8, 1942, the Senate, by a vote of 52 to 34, rejected similar proposals contained in certain legislation. Now, however, the whole issue has been submitted once more. It is difficult to see how the Congress would now act differently than it did in prior years. In all the long history of the Supreme Court not a single case can be cited that the Federal Government has the right to tax State and municipal bonds. Certainly if municipal bonds are to be subjected to Federal taxation, the only proper way is through constitutional amendment; and Whereas imposition of the Federal tax on municipal bonds would result immediately in an increase in the interest rates which States and cities would have to pay on future borrowings, and the burden of such a Federal tax would be largely on the real estate or property taxpayer, who would have to foot the increased financial burden. The studies conducted in 1939, 1940, 1941, and 1942 indicated that if the Federal tax were to be applied cities could expect an increase of up to 1% percent in interest rates. These classes of bonds have never been taxed because States' rights under the Constitution of the United States; therefore be it Resolved by the Board of Commissioners of the City of Trenton, N. J., That opposition be and the same is hereby registered against this destructive proposal of the Treasury by authorizing and directing the city clerk to mail copies of this resolution to the Congressmen and Senators of the State of New Jersey now representing us in the United States Government in Washington, D. C., which includes A Congressman Robert W. Kean of New Jersey, who is one of the members on the House Ways and Means Committee, and also to Congressman Robert L. Doughtion of North Carolina, who is chairman of the House Ways and Means Committee, which has the proposed Federal taxation of municipal bonds under consideration' THOMAS F. WALDRON. ANDREW J. DUCH. DONAL J. CONNOLLY. Chairman, House Ways and Means Committee, House Office Building, Washington, D. C. DEAR MR. DOUGHTON: On behalf of the city of Gary, I feel I must lodge a vigorous protest against the proposal to tax the income from municipal securities. The only result that can come from the abolition of the present exemption is a greatly increased cost to our States and cities in their financing programs. I do not believe that the Federal Government should attempt to do indirectly what it is forbidden to do directly, namely, to tax local governmental bodies. The Federal Government would receive additional tax income from individuals, but these individuals in turn would expect greater returns from the securities we offer, so that in the end it would be the local governments who foot the bill. You must be aware of the crushing burden under which cities are obliged to operate with very few avenues of revenue open to them. We must condemn as most unjust any attempt by the Federal Government, which has unlimited possibilities of taxation, to add to the difficulties we already experience. Very truly yours, Hon. ROBERT L. DOUGHTON, EUGENE SWARTZ, Mayor. CITY OF CHARLOTTE, N. C., February 6, 1951. House Office Building, Washington, D. C. DEAR MR. DOUGHTON: Reference is made to our telephone conversation of this date, at which time you suggested that I write you regarding this matter. It is noted that Secretary Snyder again persists in recommending to your committee that the tax exemption be removed from future municipal bond issues. As you already know, this question has been bitterly fought out twice during the past 10 years, and twice defeated by the Congress. I feel sure you will agree after having heard these debates, that the issues involved are more important and transcend the amount of tax to be recovered. It is my sincere conviction that it would be little short of tragic, at a time when our collective efforts are so badly needed in the defense of our country, to incur another time-consuming and soul-searing struggle over a matter which has been twice before defeated. I earnestly urge you to use your every influence to have this proposal promptly killed by your committee. Cordially and sincerely, Hon. ROBERT L. DOUGHTON, H. A. YANCEY, City Manager. CITY OF CHARLOTTE, N. C., February 12, 1951. House Office Building, Washington, D. C. DEAR MR. DOUGHTON: Thank you for your letter of February 9. It is possible that the great pressure upon your office at this time has led you to the conclusion that our protest against the taxing of the State and municipal bonds is just another protest against raising taxes. Such is not the case. It is the opinion in the best-informed municipal circles in the United States that the Secretary of the Treasury is simply taking advantage of a national emergency to again foster a scheme which has twice been defeated by the Congress in more normal times, and one which would hold little promise of success now but for the emergency. 79120-51-pt. 2-27 |