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Home My WebLink AboutResolution - 062669H - Council Opposes Any Plan That Limits The Tax Exempt Status Of Interest Paid - 06_26_1969RESOLUTION IN OPPOSITION TO ANY LIMITATION ON THE TAX EXEMPT STATUS OF INTEREST PAID ON MUNICIPAL BONDS WHEREAS, the Congress of the United States is considering several plans whicl wou4,limit the exempt status for income purposes of interest paid on bonds issued by cities; and WHEREAS, any limitation on tax exemption of interest paid on municipal bonds will result in higher interest rates to be paid by cities, and limit the market for sue bonds; and WHEREAS, such limitation on tax exemption of interest paid on municipal bonds wilI handicap local governments in securing funds for p-Lblic improvements, and increase lthe burden on local taxpayers and on users of public facilities; NOW THEREFORE: BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the City Council goes on record as opposing any plan by the Congress of he United States that would in any way limit the tax exempt status of interest paid n bonds issued by state or local governments; and $E IT FURTHER RESOLVED that a copy of this Resolution be mailed to the nifed States Senators from Texas, and to the Member of Congress in whose istrictthe City of Lubbock is located. assed by the City Council this 26th " TTEST: Lowe, City Secretary -Treasurer red O. Senter, Jr. , Cit ttorney No Text !- 1 tit ,,< t ' ,. J .'•p r - < + s _ [ ' 1 C 4 1 .? ,. 1 •. RESOLUTION , ..... 7N .OPPOSITION TO:ANY LIpIlITATION ON THE TAX EXEMPT. r' ' ' • STATUS .OV INTEREST :,PAID'. ON =MUNICIPAL BONDS r E ` - t. ,t' WHEREAS, the: C• ongre.'ss of the :United States ig; considering several plans wtuch �; I. I. �J1 :l1, would limit the exempt etatus::for income purposlss of interest paid on bonds issued /> by cities; .and f 4 , ,.. 4 ,r ,A4`rz v,. • WHEREAS, =and limitation on taxi exeiiiptian of jnter'est,paid on municipal bonds t,•t r - .. will. result • m..`higher:'interest raters .to be, paid .by`.citl�e, :and'-U.mit;the market for r r - ? such bonds:; `'and , :, sz ` ''�` ,:;' i' ' 'r �' � WHEREAS such limitation:on tax exam ion ofinterest aid on munici al bonds ;f,- P P Pt ;Viwill', handicap,loCal governments m'secu uig funds: for, putl c;improvements, and, t , 4 , `-� " increase the burdenIpn lo'cal'taxpaye''sand on s'ers,of •publia'.facilities; NOW . { '° THER EFQRE , ; 4 y s , i .;, - i ,ti t ' r + G ,� _" S Hr .p JT J. - x , �,. +{•, ..- r F {t } rt,? J. r ,, .- , „ BE •.IT RESOL ED BY THE CITY 'COUNCIL OF 'THE 'CITY, OF LUBBOCK: r , [ j .. -. - - w - :. -- ' - { THAT the City Council goes on record as .opposing any'p1* n by+'the Congress of he United States that would in any .way"aiinit'.the: tax exempt',status of interest paid' x ; n' bonds issued `by state o'r locaY_ governments'• and ; ' ' 4 J . g' ., + . ' ;BE I. ''tf.i THER RESOLVED that a copy ofJ this- Resolution be ,mailed'to'the . �� ;} 4, -.t' nited States Senators from'Texas,_and to the lViernb r Hof .Congress in whose i . y s r°Ifi ' ;",: istrict the City of Lubbockis located. :� : Y ', +' ' t 4 sit 'Y .i 1- }"ki' � i. Y t 's `T. �1 r i r 1. .' A Y. ' :fz r assed by the City GpuhcRAtkus. da'Qf ,5 ],969. ` r _ ` - { Y - `'..r'+-i{--5� :� Y s rf ii t t f. fi s } . Y f I t.Jf,_ s i J 4' r q !�e ♦ . r } rt - d r j 4• y. ki !,1w s 'r� x =s: r t rc •F y k[ 7 }} �t s , ,, ,.4.t 1.. ,) • Y r+ J r YT 1 4 j ,." " � 5 � 1 SCf ; •, y 5 'i, "1 J t". r A,' J.::5 , c .y ., IG� t V-; , r.YY }.4 '4 [ n Y t i }rr -.,. - _ f f [G j T* ' r a _i r [ r F - - s t +r t 4 a r J - di. ) i. ` {T �'^ I4 t i Gt J 74 .. ,�J " "W: `D, RSOGERS, JR. , G MAYOR f TTEST� t ,. u ", F. + •fS Y ` St �- y-71 1 r' 1 t' . .,'' lx= t, t ! ' - I 7 ~ - ` ,IJ 1 i 1 , G 1 t+ iJ =' f Mtt:•l { .4 ' J i J 1 t _ x>jt t ri, _ �' t .. a c i 4+, Al J t } j ,. _ t '`_ +•`\ {' } t ; 7 {' t. ,J ,Vr .. s t cyanic Lowe,Y`:City,,Secretary Tre,asu[rcr �t► ; y 4.: r - ' 4- f,{ _ °j . .� e'i 1 .� >F y , z •, 4� �. 4 ♦ �_ , r r 'tit J t , PPROVED r _ r + ti L r i [ _ , of y 3 �, [ + > S l s i ;. .r. NIkJ •�' _ t-i r , [ ;€ ` - S t * '.t 'ti . €: 'i d 5, 1 I-" t _, - ,,.r r .r '_ !ye ti -:7 5J - ; - . i J- r c 1 = Ott:"k t 4 4 , iJ. / i, - r r� _ c: , 4 I "' y Fred O..Senter,. Jr. ,City Attornesr. ' f' �L k `., ,;, �. ^'' � r'J y n 4 ', r , ,i. J• 11 '4,. ', , ' ) . ` r t. J '- - rs. 'J J: tr J 14 a. Y �, r.;, r { . ( . - . , - . 11 k .:EDITORIAL. Congress -Leave our Bonds Alone! { CONGRESS IS once again considering legislation interest rates would result from the investor's desire which would tax interest on municipal bonds, but this to compensate for tax loss. In addition, institutional time there is a twist. investors, which may not be affected for now, would i The old threat of outright removal of the tax-exempt anticipate eventual extension of taxation to their opera - status seems less likely than a subtle, indirect approach tions In the yields they bid for municipals. Such an which would increase taxes for Individuals and corpora- increase, perhaps as much as l Ih to 2 percentage lions with tax-exempt incomes, including income de- points, added to already high rates, would push the rived from interest on municipal bonds. Minimum cost of money beyond tolerable economic limits and, income tax, allocation of deductions, or a modified in many cases, beyond legal maximum interest rates. "limited tax preference" Fare frequently mentioned Certainly, all these factors added together would mechanisms.* Whether direct or Indirect, the effects produce a period during which no municipal bonds are roughly the same. would be sold, or they would be sold only at excessively We are dismayed that Congress is considering a move high interest rates. The execution of many critical which would increase local fiscal burdens and unsettle capital improvement programs would be halted or the one area of municipal finance in which a degree postponed. With local financial resources as tight as of stability still exists: capital financing. they arc and with the need for drastic physical improve - The question of the basic federal structure. of gov- merits in our cities at a peak, the potential for disaster ernment looms first. A tax on bond interest, even though ` "' exists should these proposals go through. ^y indirect, challenges the constitutionally derived protec- tion afforded one level of government from taxationOR SHOULD CONGRESS have to be reminded by another. Upheld on many previous occasions, this that the so-called "taxpayers' revolt," to which it is doctrine would be forced to undergo still another responding, starts right in our cities. Higher municipal lengthy court test during which bond attorneys would bond interest rates will be shifted directly to the local be hard put to determine the tax status of municipal taxpayer. It is thus ironic that the tax Congress seeks bonds. Taxation would remove the Independent status to secure from a very few individuals (who hold tax - municipal bonds enjoy in the market place and the exempt bonds) will be shifted primarily to the already independence of operation this affords to local officials suffering local property taxpayers. This increased local who must carry out capital programs. Municipal bonds burden will certainly far exceed any new revenues selling in competition with federal government and collected at the federal level. But most importantly, the corporate securities not only would reduce the attrac shift of tax burden to an already heavily tapped and tiveness of some municipal bonds to investors, but also regressive local tax system hardly represents a con - would place locally determined public policy subordi- gressional concern for tax equity. nate to the interests. of the federal government and Congress should not be contributing still further to private corporations. the urban financial crisis. It ought to be devote its The possible economic impact of an indirect tax is _ efforts to its own domestic program commitments and even more frightening. A substantial increase in bond to redressing —through revenue sharing --the imbalance *The minimum Income tax or the limited tax preference would place at least some tax on a certain amount of on Individual's otherwise in resources .available to the federal government' in contrast to those available to states and localities. The ' tax-exempt Income. The allocation of deductions proposal would re- quire a taxpayer to allocate the deductions he normally makes aQalnet physical needs of our urban areas simply cannot stand taxable Income between taxable and tax-exempt income In the same proportion that his taxable income bears to his tax-exempt Income. this irrelevant and improper onslaught on the municipal Tax-exempt bonds would be affected It the bond Interest were Included in any of these proposals. bond system. ■ ;I ' DUNE 1989 8 NATION'S CITIES