TAX REFORM ACT OF 1969 TUESDAY, SEPTEMBER 23, 1969 U.S. SENATE, The committee met, pursuant to recess, at 9:25 a.m., in room G-308, New Senate Office Building, Senator Russell B. Long (chairman) presiding. Present: Senators Long, Anderson, Talmadge, Byrd, Jr., of Virginia, Williams of Delaware, Bennett, Curtis, Jordan of Idaho, Fannin, and Hansen. The CHAIRMAN. The hearing will come to order. This morning the Committee on Finance takes up the difficult question concerning the tax treatment of income earned on obligations of State and municipal governments. Heretofore, the Federal Government has refrained from taxing this interest income. The House tax reform bill does not attack the exemption for this interest in any direct manner. Rather, it includes State and local government bond interest in the so-called minimum income tax provision and also in the allocation of deductions provision. In addition, there is another amendment in the House bill which would extend Federal subsidies to State governments to help them pay the higher interest costs which would be needed if they should choose to issue their bonds on a taxable basis. In testimony before this committee on September 3, the Secretary of the Treasury recommended that this subsidy feature be deleted. He also recommended that State and municipal bond interest not be included in the minimum income tax provision. However, he did recommend that this bond interest be continued in the allocation of deduction rules, advising the committee that the Supreme Court had already decided in litigation involving a similar allocation rule in the Life Insurance Income Tax Act of 1959 that this sort of allocation would not involve the imposition of a tax on this bond interest. More than 250 witnesses requested to be heard on these features of the House tax reform bill. Unfortunately, time did not permit the committee to hear all of them. However, I do want to include in the record the names of many of those who felt this matter was important enough that they should seek to testify on it. This list is not complete. Many other witnesses who decided to testify on different aspects of the bill, as well, were also concerned about these provisions. In addition, let me include in the record an enumeration of the many petitions submitted to the Senate by State, county, and local governmental units all across the country, expressing their objection to any Federal tax on State and local bond interest. (The list of witnesses referred to and the list of governmental units submitting petitions to the Senate follow :) LISTING OF PERSONS REQUESTING OPPORTUNITY TO BE HEARD AT TAX REFORM HEARINGS ON THE SUBJECT OF BONDS WHO WERE NOT SCHEDULED Bernard J. Ach, Attorney for School District 68, Friend, Nebraska Joseph P. Adams, Port of Seattle, % Suite 242, Wyatt Building, Washington, D.C. Honorable Ernest L. Albertsen, Mayor, City of South Sioux City, Nebraska Honorable Harry P. Andersen, Mayor, City of Millard, Nebraska Richard H. Austin, Wayne County Auditor, 1220 City County Building, Detroit, Michigan Honorable Phil J. Bagley, Jr., Mayor of Richmond, Virginia Gil Barrett, County Commissioner, Dougherty County, Albany, Georgia William H. Beasley, Rankin-Beasley, Inc., Suite 220, Healey Building, Atlanta, Georgia Bill B. Betz, Enright, Elliott and Betz, Suite 703, 606 S. Hill Street, Los Angeles, California Herbert J. Binham, Executive Secretary, Tennessee Municipal League, Nashville, Tennessee Honorable G. T. Blankenship, Attorney General, State of Oklahoma, Oklahoma City, Oklahoma Johnny Bowman, Chairman, Eddy County Commissioners of New Mexico, Carlsbad, New Mexico Henry L. Bridges, Auditor, State of North Carolina, Raleigh, North Carolina. Honorable Chauncey H. Browning, Jr., Attorney General, State of West Virginia, Charleston, West Virginia Cecil S. Brubaker. General Counsel, Metropolitan Utilities District, 1723 Harney Street, Omaha, Nebraska Honorable Eugene W. Buch, Mayor, City of Fremont, Fremont, Nebraska Honorable Francis B. Burch, Attorney General, State of Maryland, Annapolis, Maryland Jack S. Burk, President, Barnard and Burk, Inc., Baton Rouge, Louisiana William Carey, Chairman, Delegation Board of Sarasota County Commissioners, Sarasota, Florida Richard Carpenter, Executive Director and General Counsel, League of California Cities. 1108 O Street, Sacramnto, California Stanley R. Cowle, Administrator, County of Hennepin, 136 Court House, Minneapolis, Minnesota Robert Q. Crane, Treasurer and Receiver General, State of Massachusetts, Boston, Judge Charles E. Curry, Jackson County Court, Jackson County, Missouri Honorable Frank H. Davis, Treasurer, State of Vermont, Montpelier, Vermont Honorable John Ditter, Mayor, Grand Island, Nebraska C. O. Donahue, Hawkins, Delafield and Wood, 67 Wall Street, New York, NY Honorable Joseph A. Doorley, Jr., Mayor, City of Providence, Providence, Rhode Island Robert L. Ehlers, Ehlers and Associates, Inc., Municipal Finance Consultants, 507 Marquette, Minneapolis, Minnesota Marvin Ellis, President, Board of Education, Bellevue Public School, 2009 Franklin, Bellevue, Nebraska Joseph O. Evans, Suite 707, 1028 Connecticut Avenue, Washington, D. C. Houston I. Flornoy, Controller, State of California, Sacramento, California 5. P. Gaillard, Jr., Gaillard, Wilkins and Smith, PO Box 164, Mobile, Alabama Miss Evelyn Gandy, Treasurer and Member, Bond Commission, State of Mississippi, Jackson, Mississippi Honorable W. F. Gettman, Mayor, City of Hastings, Hastings, Nebraska Joseph E. Gibson, Supervisor, Albemarle County, Charlottesville, Virginia Robert D. Gilberts, Superintendent of Schools, School District No. 1, City and William G. Berge, President of Board of Education, School District No. 1, City and County of Denver, Colorado Edwin Gill, Treasurer, State of North Carolina, Raleigh, North Carolina Cornelius W. Grafton, Attorney at Law, 310 West Liberty Street, Louisville, Honorable Milton H. Graham, Mayor, City of Phoenix, Arizona William Greene, CPA, 300 Central Park Avenue, Hartsdale, New York Thomas P. Guerin, General Manager, Commission of Public Docks, 370 N.W. Front, Portland, Oregon William Hackman, President, Board of Education, Gering, Nebraska William T. Hackett, Jr., Executive Director, Louisiana State Department of Commerce and Industry, Baton Rouge, Louisiana E. R. Hafner, Executive Secretary, Association of County Commissioners of Florida, Tallahassee, Florida Raymond H. Hawksley, General Treasurer, State of Rhode Island, Providence, Honorable Robert M. Haworth, Mayor, City of Bellevue, Nebraska Lewis R. Holcomb, Executive Secretary, Washington Public Ports Association, 210 East Union Avenue, Olympia, Washington Joseph F. Hughes, Director of Finance, Municipal Building. Edison, New Jersey Robert Hutches, Chairman, Manatee County Port Authority, Court House, Bradenton, Florida Orvil J. Johnson, City Manager, City of West St. Paul, Minnesota Ralph T. Keyes, Executive Secretary, Association of Minnesota Counties, St. Paul, Minnesota Paul G. Kinkelspiel, Stone and Younger, 1314 Russ Building, San Francisco, California David E. Hartley, Stone and Younger, 1314 Russ Building, San Francisco, California Honorable Carl T. Langford, Mayor, City of Orlando, Florida Gordon L. Larson, Mayor, City of Chadron, Nebraska Honorable Arthur Levitt, Comptroller, State of New York, Albany, New York A. Barry McGuire, Executive Director, Michigan Association of Counties, 319 W. Robert B. McLeaish, Jr., County Auditor, County of Hidalgo, Edinburg, Texas Honorable Crawford C. Martin, Attorney General, State of Texas, Austin Carl Meissner, Cottage Grove Village Administrator, 7201 14th Avenue, Cottage Honorable Floyd C. Miller, Mayor, City of Seattle, Washington Richard E. Moore, Certified Public Accountant, 1615 Bonanza Street, Walnut Creek, California G. A. Morrison, Commissioner of Revenue, Juneau, Alaska Nebraska State School Boards, 1320 J Street, Lincoln, Nebraska Hon. Gary K. Nelson, Attorney General, State of Arizona, Phoenix, Arizona William J. O'Brien, Auditor, State of Minnesota, St. Paul, Minnesota Fioravante G. Perrotta, New York City Finance Administrator, New York Donald J. Reeb, State University of New York, Graduate School of Public Af- James G. Richardson, Secretary, Community Affairs, State of Florida, 2200 N.W. Osee R. Fagan, City Attorney, City of Gainesville, 212 S.E. 1 Street, Gainesville, Robert C. Riehle, President, Wainwright and Ramsey, Inc., 70 Pine Street, New Honorable David H. Rodgers, Mayor, City of Spokane, Washington Jack Rogers, Executive Secretary, Washington State Association of County Commissioners, 106 Maple Park, Olympia. Washington Marvin Rohrer, President, Arizona Supervisors and Clerks Associated, Court House, Prescott, Arizona Fred W. Rosenfield, Phoenix, Arizona Daniel F. Ruge, Director, Washington Office, State of New York, 1200 Eighteenth Street, N.W., Washington, D.C. Honorable Sam Schwartzkopf, Mayor, City of Lincoln, Nebraska Duane N. Scott, Director, Obio Municipal Advisory Council, 508 Terminal Tower, Cleveland, Ohio. Honorable Edward Sedlock, Mayor, City of Woodhaven, 21869 West Road, Woodhaven, Michigan Vincent M. Simko, Treasurer, City of Bridgeport, Connecticut Herbert H. Smith, Executive Director, County Officers Association of the State of New York, 248 State Street, Albany, New York Richard L. Stoddard, Director, Division of Investment, Trenton, New Jersey A. F. Summer, Attorney General, State of Mississippi, Jackson, Mississippi Joe E. Torrence, 308 Metro Courthouse, Nashville, Tennessee Richard Van Hoose, Superintendent, Jefferson County Public Schools, 3332 Newburg Road, Louisville, Kentucky Honorable Edward I. Vrzal, Mayor, City of Norfolk, Nebraska William F. Wallace, Jr., Box 1820, 500 Vaughn Plaza, Corpus Christi, Texas Honorable Kevin HI. White, Mayor, City of Boston, Massachusetts Robert P. Will. Legislative Representative, The Metropolitan Water District of Southern California, 1111 Sunset Boulevard, Los Angeles, Calif. Thornley Wills. Chairman, Clay County Board of Commissioners, Clay County Court House, Moorhead, Minnesota Hon. Leo. Winters, State Treasurer. Oklahoma City, Oklahoma Judge L. D. Word, County Judge, Courthouse, Knoxville, Tennessee Ralph Wulz, City Manager, 204 South Main Street, Wichita, Kansas Albert Alfred, Chairman, Board of Brown County Commissioners, New Ulm, Minnesota John E. Egan, President, Metropolitan Sanitary District of Greater Chicago, Chicago, Illinois Honorable Albert P. Brewer, Governor of Alabama, Montgomery, Alabama. Honorable John Dempsey, Governor of Connecticut, Hartford, Connecticut |