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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]

R. STANTON KILPATRICK, City Clerk.

CITY OF SCHENECTADY, N. Y., February 8, 1951. Hon. ROBERT L. DOUGHTON, 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.

gress; and

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 Con

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, 88: I hereby certify that the foregoing is a true copy of a resolution adopted by the Pontiac Čity 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.

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City of WINSTON-SALEM, N. C., February 6, 1951. Congressman ROBERT L. DOUGHTON, Chairman, House Ways and Means Committee,

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,

Mayor of Winston-Salem.

CITY OF ROCKFORD, ILL., February 20, 1951.
Hon. Robert L. DOUGHTON,
Chairman, House Ways and Means Committee,

House Office Building, Washington, D. C. 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

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.
GEORGE W. PAGE.

GEORGE W. RIEKER. Adopted February 21, 1951.

City Clerk.

City of Gary, IND., February 20, 1951. Hon. ROBERT L. DoughtON, 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,

EUGENE SWARTZ, Mayor.

City of CHARLOTTE, N. C., February 6, 1951. Hon, Robert L. DOUGHTON,

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 in, volved 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,

H. A. YANCEY, City Manager.

CITY OF CHARLOTTE, N. C., February 12, 1951. Hon. ROBERT L. DOUGHTON,

House Office Building, Washington, D. C.
DEAR MR. DOUGHTON: Thank you for your letter of February

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.

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We are fighting for a principle. We are protesting against further usurpations by the Federal Government of the sovereign powers of the States.

The little money to be recovered by the Government is small compared to the millions that it will cost the urban people of this Nation for all time to come.

It is significant that some of our best legal minds raise the question of constitutionality.

I again suggest that it is tragic for us to have to spend the time and effort that will be required on a national scale, regardless of the outcome, in rehashing a twice-defeated proposal, when our collective thought and effort is so sorely needed in the defense of the country. Very sincerely yours,

H. A.'YANCEY, City Manager.

CITY OF CHARLOTTE, N. C. Whereas an effort is being made to induce the Congress of the United States to pass legislation taxing the income derived from securities issued by sovereign States and their political subdivisions; and

Whereas outstanding economists have estimated that the levying of a Federal tax on the income from municipal bonds will result in municipalities having to pay an increased rate of interest on such bonds equal to approximately $2 every time the Federal taxing power gains $1 in consequence of such proposed legislation; and

Whereas the additional cost to the taxpayers of Charlotte and Mecklenburg County alone on bonds authorized but not issued would amount to $2,148,750; and

Whereas similar increases in taxation can be anticipated on all future bond issues of this city and county; and

Whereas it is believed, as stated in many United States Supreme Court decisions, that the power to tax is the power to destroy, and that the giving of such power to the Federal Government would be a step toward the establishment of a totalitarian state and would enable the Central Government to use coercion in forcing through its policies by the weapon of driving State and municipal securities from the market through heavy taxation: Now, therefore, be it

Resolved by the council of the city of Charlotte, N. C., That the Congress of the United States disapprove of the recommendations of the Secretary of the Treasury to permit taxation of State and municipal bonds by the Federal Government unless the consent of the States is first obtained through a constitutional amendment; and be it further

Resolved, That a copy of this resolution be transmitted by the city clerk to the two Senators and Members of the House from North Carolina.

I, Lillian R. Hoffman, city clerk of the city of Charlotte, N. C., do hereby certi'y that the foregoing is a true and exact copy of a resolution adopted by the city council of the city of Charlotte, N. C., in regular session convened on the 14ih day of February 1951, and is so recorded in minute book 33, at page 465, and in resolutions book 1, at page 368.

Witness my hai nd the corporate seal of the city of Charlotte, N. C., this the 15th day of February 1951. (SEAL)

LILLIAN R. HOFFMAN, City Clerk.

CITY OF LITTLE Rock, ARK., February 6, 1951. Hon. WILBUR D. Mills, Member of Congress, House Office Building,

Washington, D. C. DEAR WILBUR: My attention has just been called to the fact that Secretary Snyder suggested to the House Ways and Vieans Committee the exemption from Federal taxation for future issues of municipal bonds.

Congress has on two occasions within the past 10 years refused to impair the sovereignty of States and cities in this way.

The effect of removing the municipal bonds from the tax-exemption list will merelv mean that it will increase the cost and add to the tax burden of the municipalities for the sole purpose of adding to the Federal coffers.

With the Federal Government now taking more than 80 percent of all taxes, and leaving merely 15 or 20 percent for State, county, and city government, it is apparently most unfair to permit this to occur.

I urge that you use your influence against removing the exemption from Federal taxation of municipal bonds. If in your judgment it is necessary, we would like to have an opportunity to appear and testify before the committee. I am hopeful, however, that the committee will not give serious consideration to Secretary Snyder's request.

Will you write and give me some information as to the status of the matter?
With best wishes, I am
Sincerely,

Sam M. WASSELL, Mayor.

CITY OF Jackson, Mich., February 9, 1951. Congressman GEORGE MEADER,

Washington, D. C. MY DEAR CONGRESSMAN MEADER: As the mayor of the city of Jackson, Mich., I greatly deplore the suggestion that income from municipal bonds be made subject to Federal taxation.

Such a proposal would, as I view it, simply add to the financial burdens of the incorporated cities and villages of this Nation.

A factor which is so frequently overlooked is that it is not the owner of the municipal bond who would stand to lose, but it is every single taxpayer and resident of the municipality. The Federal Government has almost unlimited sources of revenue.

The municipality is by law restricted to local property tax (but only up to a fixed limit), plus a few license fees and similar miscellaneous revenues.

To make the borrowing of money by cities more costly, will retard local growth and stagnate the very lifeblood of our local governmental units. I hope that you will do everything possible to defeat this idea. Sincerely yours,

James N. House, Mayor.

THE CITY COUNCIL OF AUGUSTA, Ga.,

February 20, 1951. To all Members of House Ways and Means Committee:

DEAR Sirs: It has come to my attention that there is before the House Ways and Means Committee a proposed Federal taxation of municipal bonds, and I wish to enter a protest against this proposed invasion of the constitutional rights of our city governments.

In the past, the city of Augusta has registered a protest when this proposed legislation was discussed, and we are still against such a bill to tax municipal bonds.

The burden of the Federal tax would not fall upon the bondholder, but upon the borrowing city or State government, and in most cities it would be the real estate or property taxpayer who would have to foot the increased financial burden.

Trusting that you will give your wholehearted support to the freedom of our cities from this proposed taxation of municipal bonds, I am Very truly yours,

W. D. JENNINGS, Mayor. Copies: Hon. Paul Brown, Hon. Richard B. Russell, Hon. Walter F. George.

City of Newton, Mass., February 9, 1951. DEAR CONGRESSMAN HERTER: May I briefly state my earnest opposition to any proposed Federal taxation of municipal bonds. It should be realized that every one of our real-estate and local taxpayers and employees are staggering under very heavy Federal taxes today. If you tax our municipal bonds, the interest rates will jump up and add a considerable cost in the tax levy which must be paid. The ultimate cost will fall on our local taxpayers.

All this constitutes a further transgression upon home rule in our cities, and I appeal to you to leave us alone. We are all paying liberally for Federal expenses, meanwhile cutting our local expenditures in all ways so our people can exist on their reduced net incomes.

This is a basic matter of important governmental relationships which should not fail effective consideration. We mayors are, after all, closest to the people,

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