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CITY OF PENSACOLA, Fla., February 11, 1951. Congressman ROBERT SIKES,
Washington, D. C.: I have been directed by the city council to communicate to you its alarm at the growing movement to remove the exemptions on income tax for the interest on municipal bonds. The removal of this exemption will in fact be the taxing of the municipality which will be contrary to the intention of the writers of the Constitution. Should the income on municipal bonds be taxable the interest rates thereon would rise abruptly. The city of Pensacola contemplates selling in excess of $134 million of bonds within the next year and any adverse effect on interest rates would be very costly to the city. Your resistance to any change in this exemption will be greatly appreciated by the city council and will be a great service to the citizens of Pensacola.
OLIVER J. SEMMES, Jr., City Manager.
CITY OF PADUCAH, Ky., February 21, 1951. Hon. ALBEN W. BARKLEY, Vice President of the United States,
Washington, D. C. MY DEAR MR. VICE PRESIDENT: The sources of revenue available to the city of Paducah, like those of many other municipalities, are so limited that any additional burden placed upon the owners of real and personal property subject to taxation will work a great and unnecessary hardship upon them. In an effort to furnish the governmental services demanded, and especially those facilities which are immediately required because of the selection of the site of the Kentucky Ordnance Works for the construction of the atomic-bomb plant, our people will be so overburdened by any additional taxation that any increased load, however insignificant it may be, will be felt.
It is understood that there is to be again presented a measure to tax future issues of State and municipal bonds. We believe this form of taxation is not only wrong in principle, but if such taxes are imposed, the interest rates upon bonds will certainly be increased and much of the ultimate burden will fall upon the taxpayers. The borrowing power of municipalities will also be greatly impaired, Feeling as they do concerning the proposed legislation, the members of the board of commissioners have adopted a resolution opposing its passage. An attested copy of the resolution is attached.
We sincerely hope you will not favor such legislation which, we believe, is an indirect form of taxation against municipalities, and that you will make known your protests in such manner that they can be assured of continued control of their own financing without Federal interference. Yours very truly,
STUART JOHNSTON, Mayor, City of Paducah.
A RESOLUTION RELATING TO THE PROPOSAL WHICH HAS BEEN PRESENTED TO THE
CONGRESS FOR TAXATION OF STATE AND MUNICIPAL BONDS
Whereas it appears that there has again been presented to the Congress & proposal that future issues of State and municipal bonds be subject to Federal income taxation; and
Whereas the imposition of the Federal tax on municipal bonds will greatly increase the interest rates which cities would be required to pay on future borrowings, and consequently the burden o such tax measure will fall upon the owners of real estate and personal property: Now, therefore, be it
Resolved, That the city of Paducah protest against the proposal for the taxation of municipal bonds by the United States Government, and that the Mayor be authorized to transmit to the Honorable Alben W. Barkley, Vice President of the United States; the Honorable John R. Steelman, Executive Assistant to the the President; the Honorable Noble Gregory, Congressman from this district; and the Honorable Virgil Chapman and Honorable Earle C. Clements, United States
Senators; and the members of the House Ways and Means Committee, a letter urging them to oppose the measure, and that he also transmit to each a copy of this resolution.
STUART JOHNSTON, Mayor. Passed by the board of commissioners, February 20, 1951. Recorded by Sarah Thurman, city clerk, February 20, 1951.
I, Sarah Thurman, clerk of the city of Paducah, hereby certify that the foregoing is a true and correct copy of a resolution adopted by the board of commissioners on February 20, 1951. (SEAL)
SARAH THURMAN, City Clerk.
CITY OF BROWNSVILLE, TEX. Whereas the President of the United States and the Secretary of the Treasury have requested that the Congress plug loopholes in the present Federal taxation structure and have suggested that removal of the present and constitutional exemption of the income from municipal bonds from such taxation is one possibility; and
Whereas the House Ways and Means Committee has scheduled hearings on such a proposal for Monday, February 26; and
Whereas the very entity of a government may be endangered by an encroachment upon its rights to control its own financing; and the passage of such a tax upon the financial securities of State and local governments would tend to control these governments by directly increasing the cost of financing and thereby determine the amount, availability, and the value of such securities; and will place the burden of the proposed tax, to a great extent, upon home owners whose local taxes will have to be raised to pay increased interest cost on bonds issued by municipalities and states so that such bonds may compete in the market with industrial bonds and mortgage loans; and
Whereas the ultimate strength of the United States of America stems directly from the economic well-being of its integral parts, whether those parts be sovereign States, or the lesser political subdivisions of which each and every citizen of these United States is a resident; and the history of the Congress of the United States has shown an understanding of these facts during previous periods of dire emergency by refusing passage of acts providing for such a tax: Now, therefore, be it
Resolved by the City Commission oj the City of Brownsville, Tex.:
SECTION I. That such Commission hereby unanimously condemns and urgently protests against the passage of any act purporting to weaken or remove the present and constitutional exemption from Federal taxation of the income of State and municipal securities.
Sec. II. That a certified copy of this resolution be forwarded to the following
Hon. J. M. Combs
Hon. Hale Boggs Hon. Lloyd M. Bentsen, Jr
Hon. Eugene J. Keogh Hon. Sam Rayburn
Hon. Walter K. Granger Hon. Robert L. Doughton
Hon. Burr P. Harrison Hon. Jere Cooper
Hon. Daniel A. Reed Hon. John D. Dingell
Hon. Roy 0. Woodruff Hon. Wilbur D. Mills
Hon. Thomas A. Jenkins Hon. Noble J. Gregory
Hon. Richard M. Simpson Hon. A. Sidney Camp
Hon. Robert W. Kean Hon. Aime J. Forand
Hon. Carl T. Curtis Hon. Herman P. Eberharter
Hon. Noah M. Mason Hon. Cecil R. Kind
Hon. Thomas E. Martin Hon. Thomas J. O'Brien
Hon. Hal Holmes
Hon. John W. Byrnes
H. L. STOKELY, Mayor. Attest:
J. W. Sloss, City Secretary.
A RESOLUTION OPPOSING THE PROPOSAL OF THE SECRETARY OF THE TREASURY
THAT INCOME FROM MUNICIPAL BONDS BE SUBJECTED TO FEDERAL INCOME TAXES
Whereas the Secretary of the Treasury has proposed enactment of legislation by Congress to subject income from municipal bonds to Federal income taxes; and
Whereas such a tax would result in an increase in the interest rate on municipal bonds of 1 percent, the effect of which would be that municipalities would indirectly pay income tax to the Federal Government to this extent; and
Whereas there are certain municipal projects, such as the present proposed project in this city for a sewage-disposal plant and the present proposed project for off-street parking facilities, which in most cases can be financed only through municipal revenue bonds; and
Whereas, in case of municipal revenue bonds, this added interest rate would reduce the coverage on said bonds and may destroy the feasibility of many such projects; and
Whereas such a tax, if imposed on general obligation bonds of a municipality, would increase the real-estate taxes supporting said bonds, the effect of which would be that real estate would be burdened with paying indirectly an income tax to the Federal Government to this extent; and
Whereas, since the inception of our Government, the doctrine of reciprocal sovereign immunity of one level of government from interference through taxation with agencies of another level of government has universally been recognized; and
Whereas, as stated by Chief Justice Marshall, in McCulloch v. Maryland, "The power to tax involves the power to destroy,” which is a fundamental principle as true today as when written: Now, therefore, be it Resolved by the Council of the City of Youngstown, State of Ohio:
Section 1.—That the Council of the City of Youngstown go on record as opposing any legislation to subject municipal bonds to Federal income taxes, and that all United States Senators and Members of Congress be respectfully requested to most strenuously oppose any legislation to subject municipal bonds to Federal income tax for the reasons above stated and for the further reason that said legislation is unconstitutional and would destroy the sovereignty of local governments.
Sec. 2.- That the clerk of council be and hereby is directed to send a copy of this resolution to the Senators and Representatives of Congress from Ohio. Passed in council this 19th day of February 1951.
FRANK X. KRYZAN, President of Council. Attest:
JNO. H. LEMON, Clerk. Approved this 20th day of February 1951.
CHARLES P. HENDERSON, Mayor. Filed with the mayor this 20th day of February 1951.
CITY OF LOWELL, COMMONWEALTH OF MASSACHUSETTS
In city council
RESOLUTION PROTESTING PASSAGE OF LEGISLATION PROVIDING FOR TAX ON IN
TEREST PAYMENTS TO HOLDERS OF BONDS AND OTHER SECURITIES OF MUNICIPAL CORPORATIONS
Whereas it has been called to the attention of the City Council of the City of Lowell that there is now before the Congress of the United States a proposal for the enactment of legislation providing for the imposition of a Federal tax upon interest payments to holders of bonds and other securities of municipal corpor:tions; and
Whereas the City Council of the City of Lowell, having fully considered the probable consequences to cities and towns, and particularly to the city of Lowell, of the enactment of such legislation, and having concluded that any legislation providing for such taxation is contrary to the best interests of the city of Lowell
because it would, in all likelihood, result in a substantial increase in the cost of its future financial program and might well affect the marketability of its securities. Now, therefore, the City Council of the City of Lowell hereby resolves to protest the passage of any such legislation by the Congress of the United States now or in the future; and it is hereby
Ordered, That the city clerk spread this resolution upon the records of the city council and send copies thereof to the Members of the House of Representatives and the Senate of the United States from this district, and to the House Ways and Means Committee now in session at Washington, D. C., and any other committee or committees of Congress which shall consider such proposed legislation; and it is further
Ordered, That the city manager of the city of Lowell take all necessary steps to make the position of the city known to the proper authorities and to protect its interests in any manner he may deem fitting and proper.
In city council, February 20, 1951. Read twice and voted, seven members voting yea, two members absent.
William H. SULLIVAN, Clerk. Recommended by:
JOHN J. FLANNERY, City Manager. Approved as to form:
P. HAROLD READY, City Solicitor. Approved by John J. Flannery, city manager, February 21, 1951. A true copy. Attest: (SEAL)
William H. SULLIVAN, City Clerk.
CITY OF ALTOONA, PA., February 23, 1951. Paul V. BETTERS, Executive Director, United States Conference of Mayors,
730 Jackson Place, Washington, D. C. Dear Mr. BETTERS: Altoona City Council has asked me to inform you that we want to go on record with the Conference of Mayors as opposing the proposed tax on State and local securities. Yours very respectfully,
J. LESTER Laughlin, Mayor.
City of DANVILLE, ILL.
Be it resolved by the City Council, of the City of Danville, Ill., That they communicate to the members of the House Ways and Means Committee and to each Member of the United States Congress from the State of Illinois, their opposition to any Federal legislation to remove or impair the tax-exemption feature of municipal bonds and securities; and that a copy of this resolution be sent to all the above-mentioned Members and committee of the Congress.
Adopted by unanimous vote, by the city council, this 20th day of February A. D. 1951.
GREEN BAY, Wis., February 20, 1951, By the Mayor and Council of the City of Green Bay, Resolved:
The Ways and Means Committee of Congress having before it a proposal of the Secretary of the Treasury that income from municipal bonds be subjected to Federal income taxes, and
It being apparent that the difficulties in obtaining tax funds for city treasuries would be increased twofold or more if such proposal went into effect by virtue of the fact that interest rates would be increased to the extent of the tax levied; and
It being further apparent that such taxation would merely mean a passing on of an additional tax to the city dweller; now therefore
It is urged that the Ways and Means Committee, after giving full consideration to the additional financial burden that would be placed on municipalities by the proposal of the Secretary of the Treasury, return an unfavorable report on the proposal.
T. SHEPECK. 79120451–pt. 2
I, Clifford A. Centen, the duly elected, qualified, and acting City Clerk of the City of Green Bay, Wis., do hereby certify that the above resolution is a true, correct, and compared copy of a resolution adopted by the mayor and council of the City of Green Bay, Brown County, Wis., at a regular meeting held February 20, 1951. (SEAL)
CLIFFORD A. CENTEN, City Clerk. Dated at Green Bay, Wis., February 23, 1951.
CITY OF MERIDIAN, Miss., February 22, 1951. The Honorable WILLIAM COLMER,
House Office Building, Washington, D. C. DEAR CONGRESSMAN: As spokesman for the city government of Meridian, I wish to convey to you, as well as to all the members of the House Ways and Means Committee, our strong protest against the proposed taxation of State and municipal bonds.
The principal source of income for cities is the ad valorem tax and a large proportion of that tax goes for the servicing and retirement of municipal bonds. It is common knowledge that cities everywhere must struggle to keep this tar from becoming confiscatory. Making the proceeds of such bonds subject to Federal tax, would immediately increase the interest cost and partially destroy the market for such securities.
We think this tax would be a direct invasion of the constitutional rights of States and cities and we seriously solicit your strong opposition to the measure. Very truly yours,
L. B. PAINE, Mayor.
CITY OF LINCOLN Park, Mich. Resolved, That the mayor and council of the City of Lincoln Park, Mich., hereby record their protest against any legislation to tax municipal bonds, since such action would wrench the whole Constitution from its harmonious proportions, and would destroy the object and purpose for which the whole instrument was framed; and further
Resolved, That certified copies of this resolution be forwarded forthwith to the Honorables John A. Dingell and Roy 0. Woodruff of the United States House of Representatives.
I hereby certify that the foregoing is a true and exact copy of a resolution adopted by the mayor and Common Council of the City of Lincoln Park, at their regular meeting held under date of February 13, 1951.
John M. O'CONNOR, City Clerk.
Mount Airy, N. C. RESOLUTION IN OPPOSITION TO THE PROPOSED Tax on MUNICIPAL BONDS BY THE
Town OF MOUNT AIRY, N. C. Whereas an effort is being made at this time to pass legislation to tax the income from the sale of State, county, and municipal bonds:
Whereas, the municipalities are at this time pressed to meet their obligations, due to the limited field that is left to them to derive tax income:
Whereas the taxing of said income from the sale of said securities would work a great hardship on the said municipalities, and it would make it impossible for them to carry on in the same efficient manner that is required:
Whereas it has been estimated that the levying of such a tax would result in an increase in the rate of interest that would have to be paid by said municipalities of about $2 for every $1 that the Federal Government would gain thereby, now therefore be it
Resolved by the town board of Mount Airy, N. C., That our Senators and Congressmen be requested to oppose such legislation for the taxing of State and municipal bonds.
Further, that a copy of this resolution be forwarded to the two Senators and the Members of the House from North Carolina.
I, J. C. Hill, clerk to the Board of Commissioners of the town of Mount Airy, N. C., do hereby certify that the above is a true copy of the resolution passed by the said town board on February 21, 1951.