to this proposal, the city of Corpus Christi would like to be so notified and have the opportunity of presenting testimony. I have full confidence that our Congress will not, in the words of Senator Borah "wrench the whole Constitution from its harmonious proportions and destroy the object and purpose for which the whole instrument was framed." DEAR CONGRESSMAN PATTEN: It has come to my attention that in the President's tax message early this month he suggested that Congress "plug loopholes" and referred to the removal of the present and constitutional exemption of municipal bonds as one possibility. Later the Secretary of the Treasury appeared before the House Ways and Means Committee to outline the administration's program and advocated the removal of the exemption privilege upon some reasonable basis in the taxation of future issues of local and State securities. This matter has been before Congress a number of times. I believe that it would be most unwise to institute this because it would not place the burden upon the wealthy bondholder but upon the borrowing city or State government. Studies made indicated that if the Federal tax were applied to cities they could expect an increase of about 1 percent in interest rates. As you know we do not receive very much by way of lieu taxes from any Government agencies operating within our areas and we render some service to them. It would seem no more than proper that we continue to have this slight exemption in the issue of our municipal bonds, many of which are most important to this city in its problems brought about by the rapid growth in population of the Southwest. I felt that it would be well to bring this matter to your attention so that you would know the feeling of Phoenix in the event you have the matter before your body. Cordially yours, NICHOLAS UDALL, Mayor. CITY OF MUNCIE, IND., February 20, 1951. Hon. ROBERT L. DOUGHTON, Chairman of House Ways and Means Committee, House Office Building, Washington, D. C. DEAR CONGRESSMAN: I am greatly interested in the proposal that municipal and State bonds be subjected to Federal income taxation upon which a hearing is scheduled before your committee next Monday, February 26. It may be admitted that this source of revenue now escaping Federal taxes would amount to surprising sums but it is also factual that such losses would be directly paid by the taxpayers in each of our cities and towns or those States which are authorized to create a bonded debt. The State of Indiana is prohibited the use of bonding credit. Our city is under a State board of health directive as well as a streams pollution board mandate to eliminate present unsanitary sewage conditions in approximately 25 percent of our areas together with expansion of our sewage-treatment works. Engineers are presently engaged in preparing plans and specifications for an estimated $3,500,000 combined project. The only feasible method of financing this necessary program for Muncie is through the issuance of revenue bonds. It may be assured that if these bonds are subjected to Federal taxation that our interest rates will be materially higher and thereby add much greater costs to the project. Such bonds would have to be issued for a period of 30 years so our people would continue to shoulder this load throughout that period of time. As you may already know all cities are continuously facing improved services while our sources of revenue with which to provide the same are being constantly absorbed by State and Federal acts. It is sincerely hoped that your committee will spare us the creation of even greater costs for these "must" improvements which can only be financed through our bonding credits. Respectfully yours, LESTER E. HOLLOWAY. CITY OF TAUNTON, MASS., February 8, 1951. Congressman JOSEPH W. MARTIN, Jr., House of Representatives, Washington, D. C. DEAR CONGRESSMAN MARTIN: It is my understanding that there is legislation coming before the House Ways and Means Committee relative to taxation of municipal bonds. This legislation, if enacted, will place a tax on future issues of State and municipal bonds. I feel it is my duty as a mayor to file with you an objection to the passage of this legislation as it will become another burden on the real-estate taxpayer if he must pay additional taxes to support a program of governmental taxation of municipal bonds. I am certain that if the taxation of future issues of municipal bonds is upheld, there is nothing to stop governmental taxation of earnings of municipal water, electric and sewer earnings, and other revenue and so-called profit-making municipal enterprises. It is of the very essence of democracy that a municipal government be able to control its own financing and not be subject to interference by Federal agencies in the taxation of municipal finances and earnings. I am sure you agree with me on that point. Therefore, I feel that with many cities, including Taunton, anticipating bond issues for municipal improvements, any taxation of these bonds by the Federal Government will place burdens upon the home owner which are unwarranted. I do hope that you will file the objections of the city of Taunton with the Committee on Ways and Means, along with your personal objections to this proposal. With best wishes, JOHN F. PARKER, Mayor. TOWN OF WESt Hartford, CONN., February 21, 1951. Mr. PAUL V. Betters, Executive Director, the United States Conference of Mayors, Washington, D. C. DEAR MR. BETTERS: This is to inform you that on February 13, 1951, the Town Council of West Hartford, Conn., by unanimous adoption, went on record opposing Federal taxation of municipal bonds. A copy of this resolution was forwarded to every member of the House Ways and Means Committee and to all Congressmen and United States Senators from Connecticut. Sincerely yours, Mr. ROBERT L. DOUGHTON, JOSEPH M. FREEDMAN, Mayor. CITY OF PENSACOLA, FLA., February 12, 1951. Chairman, House Ways and Means Committee, and to the Members of the House Ways and Means Committee, Washington, D. C. GENTLEMEN: The City Council of the City of Pensacola in a regular meeting directed me to convey to the honorable committee its great apprehension resulting from the President's request that the interest on municipal bonds be made taxable. The city of Pensacola is preparing to sell a small issue of bonds totaling $700,000, payable serially 1 to 20 years. Making the interest on these bonds taxable will result in the city of Pensacola paying more than $100,000 additional debt service over the life of the bonds. This is but a small issue, even for a city as small as Pensacola. You can conceive what the cost of such a move will mean to your municipalities all over the United States. The city council further directs me to implore you to disregard and kill any such attempt to tax the political subdivisions of the United States. The cities are particularly hard pressed to keep abreast of the many demands being made upon them. This move to tax the cities indirectly by directly taxing the interest on the obligations will be an inordinately great burden for them to bear. Your rejection of this proposal by the administration will be a great service to your people. Respectfully yours, OLIVER J. SEMMES, Jr., City Manager. CITY OF PENSACOLA, FLA., February 11, 1951. Washington, D. C.: Congressman ROBERT SIKES, 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 $12 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, 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 a 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. 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 of 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 Members of the Congress of the United States: Unanimously adopted on this the 22d day of February A. D. 1951. Attest: H. L. STOKELY, Mayor. J. W. SLOSS, City Secretary. YOUNGSTOWN, OHIO 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. Attest: FRANK X. KRYZAN, President of Council. 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 INTEREST 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 porations; and cor 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 |