AUSTIN J. TOBIN, Secretary, Conference on State Defense: SALEM, OREG., February 14, 1951. Re tel thirteenth strongly oppose Treasury proposal to tax State and municipal bonds as unconstitutional and infringement on States' rights. Since when has the tenth amendment been abrogated? The proposal if enacted would seriously throttle finances of Oregon. If you desire you have permission to enter this protest. Hon. AUSTIN J. TOBIN, DOUGLAS MCKAY, Governor of Oregon. OFFICE OF THE GOVERNOR, Oklahoma City, Okla., February 20, 1951. Secretary, Conference on State Defense, New York City, N. Y. DEAR SIR: I have received your telegram in reference to the hearings about to be conducted by the House Ways and Means Committee on February 26, at which said hearing will be considered the proposal to tax State and municipa. bonds. Herewith enclosed you will find a copy of a telegram which I have this date sent to all of the members of the Oklahoma congressional delegation entering the protest of the State of Oklahoma against this unusual and distressing proposal. Due to the conditions over which I have no control, I find that it will be impossible for me to attend the meeting in person. I am therefore authorizing and requesting that you offer this letter to said committee on behalf of the State of Oklahoma as its protest to the proposed action. In their zeal to assist in the national defense, the various States have without serious protest watched the Federal Government invade and preempt all fields of taxation. This situation has caused in Oklahoma a serious cut-back in our local economy. We are striving by all proper means to effect economies in our State government and to curtail and even suspend many operations not considered vitally essential. There is, and surely should be, a reasonable limit to these expectations and requirements. In the State of Oklahoma, State and municipal bonds are offered to the buying public on a competitive interest basis. By this process Oklahoma bonds, heretofore tax-free, have been sold at most attractive interest rates. Our experience previous to these enactments was most unfortunate. High interest rates being then paid caused the interest charges on long-term bonds to go as high, and oftentimes exceed the principal. If the Federal Government undertakes to impose a tax on these bonds or the income therefrom now, we can expect nothing except a recurrence of this condition. It is easy to foresee that the detriments resulting will vastly exceed any benefits which the Government may derive from undertaking to impose a tax upon these securities or the income derived therefrom. For these specific reasons and upon the broad general proposition that such an invasion into the affairs of States and municipal subdivisions is unwarranted and unjustified, I hereby enter the vigorous protest of the State of Oklahoma in its own behalf and in behalf of its lesser subdivisions against any proposal to tax or interfere with the financial structures or securities offered and sold for the payment of State and municipal subdivision indebtedness. Very truly yours, JOHNSTON MURRAY, Governor. Senator MIKE MONRONEY, Senate Office Building, Washington, D. C.: FEBRUARY 20, 1951. I am advised House Ways and Means Committee will hold hearings February 26, 1951, to consider Treasury proposal to tax State and municipal bonds. You are aware that Oklahoma State and municipal bonds are sold on competitive interest bids and we have thus been able to secure very low and advantageous rates of interest. If Federal Government invades this field it will destroy market and cause high rates of interest at great expense and distress to taxpayers. I invoke your aid and assistance in protesting against this tax. The National Government has invaded and preempted in all other fields of taxation, they should surely forego this one, particularly when the resulting damage will vastly exceed any possible benefits. Hon. TOBY MORRIS, M. C., JOHNSTON MURRAY, Governor of State of Oklahoma. OKLAHOMA CITY, OKLA., February 20, 1951. House Office Building, Washington, D. C.: I am advised House Ways and Means Committee will hold hearings February 26, 1951, to consider Treasury proposal to tax State and municipal bonds. You are aware that Oklahoma State and municipal bonds are sold on competitive interest bids and we have thus been able to secure very low and advantageous rates of interest. If Federal Government invades this field it will destroy market and cause high rates of interest at great expense and distress to taxpayers. I invoke your aid and assistance in protesting against this tax. The National Government has invaded and preempted in all other fields of taxation. They should surely orego this one particularly when the resulting damage will vastly exceed any possible benefits. Hon. ROBERT L. DOUGHTON, JOHNSTON MURRAY, Governor, State of Oklahoma. EUGENE, OREG., February 20, 1951. Chairman, Ways and Means Committee, House of Representatives, Washington, D. C. DEAR MR. DOUGHTON: I have just been advised that the Ways and Means Committee is considering proposed legislation which would provide for Federal axation of the income from municipal bonds and that you have scheduled a hearing on this proposal for Monday, February 26. Since it will be impossible or a representative of the Oregon Finance Officers Association to appear before Your committee on that date, I am writing to ask that you record in the testimony of that hearing the opposition of the Oregon Finance Officers Assoication to the roposal for taxing the income of municipal bonds. Our association is composed of finance officers of the State of Oregon and of counties, cities, school districts, and other local governmental units. I am enclosing a copy of the resolutions at the fourteenth annual conference of the association in Portland last fall and would call your attention to the resoution which reaffirms the opposition of the association to any legislation which Fould make the income from municipal bonds subject to federal taxation. Such axation would result in a substantial increase in the interest rates on municipal onds, which would in turn make it necessary for many of our local units of governnent in Oregon to levy higher ad valorem property taxes. The counties and espeially the cities and school districts of Oregon which are facing large capital expendcures in order to provide facilities for Oregon's growing population are not in position to absorb increased interest rates at this time. Proposed legislation of a similar nature has been rejected by Congress on previus occasions, and we urge that your committee dismiss this proposal from onsideration. Yours very truly, GEORGE M. BALDWIN, President, Oregon Finance Officers Association. RESOLUTIONS At the business meeting held by the Oregon Finance Officers Association Wedesday afternoon, November 15, during the fourteenth annual conference held at he Multnomah Hotel, Portland, Oreg., the following resolutions were adopted: FINANCIAL COORDINATION Whereas the property tax still remains as the major source of revenue for local overnment in Oregon; and Whereas the needs of city, county, and school administrations in the same jurisictions are generally considered by each governmental unit independently and levied; and 79120-51-pt. 2——29 Whereas the impact of the combined levies often results in extremely high levies and fluctuating levies and from year to year: Therefore, be it Resolved, That the Oregon Finance Officers Association in its fourteenth annual conference go on record as favoring and urging that a movement be started to bring about close cooperation between city and county governments and school districts in coordinating their budget planning particularly with reference to capital outlay programs; and be it further Resolved, That copies of this resolution be furnished through proper channels to budget officers and budget committees of local governments throughout the State. SIX PERCENT LIMITATION Resolved, That the Oregon Finance Officers Association in its fourteenth annual conference go on record as favoring legislation enabling the establishment of a new property tax base under the constitutional 6-percent limitation. CASH WORKING FUND Whereas the first turn-over of tax moneys occurs approximately 6 months after the beginning of the fiscal year; and Whereas this delay necessitates borrowing on the part of local governmental units for current operating expenses which is an unnecessary expense; and Whereas such borrowing could be eliminated by the establishment of a cash working fund: Therefore, be it Resolved, That the Oregon Finance Officers Association in its fourteenth annual conference fav rs legislation permitting the establishment of a cash working fund in order to make borrowing unnecessary for current operations. DISBURSING PROCEDURES Whereas the present system of disbursing funds of political subdivisions is outmoded; and Whereas much confusion and duplication of effort has resulted from compliance with the present demands of the law as interpreted by the courts and the attorney general: Therefore, be it Resolved, That the Oregon Finance Officers Association direct its president to appoint a committee to make a study of the law governing the procedure of disbursing funds of political subdivisions with a view toward simplifying and modernizing it. MUNICIPAL BOND INCOME TAXATION Whereas pending before the Congress of the United States, there is a bill to make the income from municipal bonds subject to taxɛ tion the same as the bonds of private corporations; and Whereas the removal of the existing tax exemption will greatly increase the cost of municipal government and result in higher interest rates and ad valorem taxes; and Whereas on previous occasions, the Oregon Finance Officers Association has adopted resolutions opposing such legislation: Therefore, be it Resolved, That the Oregon Finance Officers Association reaffirms its former position and hereby reiterates its opposition to any legislation which would make the income from municipal bonds subject to Federal taxation. CARSON CITY, NEV., February 14, 1951. ROBERT L. DOUGHTON, Chairman, Ways and Means Committee, House of Representatives, Washington, D. C. Re Federal taxation income from State and local securities. This office strongly opposed to such taxation because it would seriously increase cost of State and local financing and undermine their ability to finance needed improvements and further subject State and local governments to Federal control. Please submit this telegram as my statement in opposition to such taxation at committee meeting on February 19. W. T. MATHEWS, Attorney General of Nevada. Congressman ROBERT L. DOUGHTON, DENVER, COLO., February 19, 1951. House of Representatives, Washington, D. C.: On behalf of the State of Colorado, I strongly oppose proposed legislation to tax income from State and local securities. Tax would seriously increase cost of State and local financing without yielding any appreciable Federal revenues for many years. Increase in local costs would undermine ability of local government to finance needed improvements and would further subject State and local governments to Federal control. Would appreciate having this statement read into record at hearing before House Ways and Means Committee hearing on this matter scheduled for February 26. Hon. ROBERT L. DOUGHTON, Duke W. Dunbar, Attorney General of Colorado. ST. PAUL, MINN., February 16, 1951. Chairman, House Ways and Means Committee, Washington, D. C. As attorney General of the State of Minnesota, I wish to be recorded in opposition to the proposed imposition of a Federal tax involving State and local securities. In my opinion, such a tax would unwisely increase the costs of financing State and local projects and encroach upon State and local powers. Testing the constitutionality of the proposed legislation, if enacted, will result in extended litigation. It is obvious that the enactment of such a tax and litigation resulting therefrom would have a very adverse effect upon the needed cooperation between the State and Federal Governments. Hon. M. G. Burnside, J. A. A. BURNQUIST, Attorney General of Minnesota. CHARLESTON, W. Va., February 14, 1951. House Office Building, Washington, D. C.: Strongly oppose proposal to tax, State and municipal bonds. Would appreciate your efforts in behalf of defeating this measure. OKEY L. PATTESON, Governor of West Virginia. HOUSE OF REPRESENTATIVES, Washington, D. C., February 16, 1951. Hon. ROBERT L. DOUGHTON, House of Representatives, Washington, D. C. DEAR MR. CHAIRMAN: I am enclosing herewith a telegram which I have received from Lake J. Frazier, mayor of Roswell, N. Mex., and president of the Municipal League in that State. I feel sure that there is some misunderstanding about any attempt to tax a political subdivision, as I feel it would be disastrous. Since Mayor Frazier asked that the league's stand on this matter be put in the committee record, I am forwarding his telegram to you. Thank you always for your favors to me. Hon. JOHN J. DEMPSEY, JOHN J. DEMPSEY, Member of Congress. ROSWELL, N. MEX., February 15, 1951. House of Representatives, Washington, D. C.: Municipal League protests any attempt by Federal Government to tax municipalities directly or indirectly, particularly Treasury proposal to tax municipal bonds scheduled for hearing Monday. Please file this protest with committee. Advise regards. LAKE J. FRAZIER, President, New Mexico Municipal League. Hon. ROBERT L. DOUGHTON, Chairman, Committee on Ways and Means, STATE OF MICHIGAN, Lansing, February 22, 1951. House Office Building, Washington, D. C. DEAR SIR: In conformity with notice of intention set forth in my letter of February 16, 1951, we are herewith enclosing original and two copies of statement upon behalf of the State of Michigan in opposition to the proposal to tax State and municipal bonds, hearing upon which is scheduled before the Ways and Means Committee on Monday, February 26. Your cooperation in bringing this to the attention of the committee will be appreciated. Very truly yours, FRANK G. MILLARD, Attorney General. STATEMENT ON BEHALF OF STATE OF MICHIGAN IN OPPOSITION TO PROPOSAL TO TAX STATE AND MUNICIPAL BONDS The undersigned State officials on behalf of the State of Michigan and its taxpayers desire to direct the attention of this honorable committee to the prejudicial effect which the taxing of State and municipal bonds would have upon the financing of essential State and municipal programs and the increased burden which would be placed thereby upon the taxpayers. Upon the State level there is already authorized, but unissued $155,000,000 of bonds, while the various political subdivisions of the State are annually authorizing the issuance of approximately $100,000,000 of bonds. This legislation, if enacted, could not help but cost the taxpayers several millions of dollars upon such issues through higher interest rates. State issues already authorized include: Sixty-five million dollars to finance the construction and equipment of hospitals. This is but the first step in the State program to rehabilitate and enlarge its State institutions, which program due to economic and world conditions existing during the last 20 years, has become badly in arrears. Forty million dollars of authorized but unissued general obligations bonds of the State to supply funds with which to pay veterans' bonus. Fifty percent participation in a proposed $100,000,000 revenue bond issue for the construction of two expressways in the Detroit area. The city of Detroit and county of Wayne are to contribute an equal amount thereto, which bonds are not included within the above figures as to bonds annually issued by political subdivisions of the State. Building programs of the local municipalities are likewise in a retarded condition. This is due not only to economic and world conditions, but also to limitations upon their borrowing power resulting, in some cases, from restrictions upon the amount of additional taxes which may be levied for that purpose. However, as shown by the itemized list attached hereto and marked "Exhibit A," political subdivisions of the State were authorized in 399 cases during the calendar year 1949 to issue bonds in the aggregate par value of $109,236,003.01. During the calendar year 1950, in 344 cases, political subdivisions were authorized to issue bonds in the aggregate par value of $96,977,945.62. While it is impossible to accurately estimate the additional cost which would be imposed upon the taxpayers of these political subdivisions and the State by the inposition of the proposed Federal tax, in our best judgment, the enactment of the present proposal would increase the rate of interest from three-fourths of 1 percent to 22 percent depending upon the terms of the particular issue and the credit rating of the municipality offering the same. However, regardless of the exact percentage there can be no question but that the imposition of such tax would result in an increase of several million dollars in the cost to the taxpayers of the State and its various municipalities incident to such bond issues. The State of Michigan, therefore, respectfully but emphatically urges consideration by the members of your honorable committee of the serious consequences to the taxpayers of this State before recommending the enactment of this legislation. Respectfully submitted. FRANK G. MILLARD, D. HALE BRAKE, State Treasurer, State of Michigan. |