The furnishing of electric energy to the public is not a governmental function, but is rather a proprietary or business function, as evidenced by the fact that approximately 78% of all electric customers in the United States are served by investor-owned companies. It is significant that, when Congress, in 1959, authorized the Tennessee Valley Authority to issue revenue bonds to finance the electric power business of TVA, it expressly provided that the interest on such bonds would not be exempt from the Federal income tax. There is no valid reason why any other governmental agency should be permitted to use tax-exempt bonds to finance facilities used in the business of supplying electric energy. Section 103 should be amended to except from interest exemption all bonds issued to acquire facilities used in the business of furnishing electric energy or in any other comparable business functions.

3. A further step which, in our view, ought to be taken to reduce existing tax inequality among similar businesses is for the Congress to authorize State and local governments to impose on Federal power systems, on a non-discriminatory basis, the same State and local taxes as are levied on comparable investorowned systems.

CONCLUSION

Government-owned and government-financed power systems engaged in the business of furnishing electric power-and their customers-should be required to make comparable contributions in taxes to those required of investor-owned power systems-and their customers. We urge that now, when one of the facets of tax reform being studied is the elimination of tax disparity among similar businesses, it is time to act to eliminate or at least reduce the tax inequities which exist in the vital electric utility industry.

Such action would achieve the highly salutary objectives of (1) eliminating or reducing an existing inequity between customers of the investor-owned segment, on the one hand, and customers of the government-owned and governmentfinanced segment, on the other; (2) reducing the disparity in tax treatment between similar businesses; and (3) broadening the tax base and increasing the Federal revenue in a significant amount.

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APPENDIX D

WRITTEN TESTIMONY RECEIVED BY THE COMMITTEE EXPRESSING AN INTEREST IN THE SUBJECTS OF LIMIT ON TAX PREFERENCES (LTP) AND ALLOCATION OF DEDUCTIONS

33-865 69 - 79 (pt. 4)

Written testimony received by the committee expressing an interest in the subjects of limit on tax preferences (LTP) and allocation of deductions

STATEMENT OF WALTER N. TRENERRY, ST. PAUL, MINN., PART 3 OF 4 PARTS: RE MINIMUM INCOME TAX AND ALLOCATING DEDUCTIONS

STANDING

Your realtor appears in his own right as a taxpayer and also as counsel for: Certain taxpayers who have gross incomes of more than $1 million a year and:

a. Realize "Tax Preferences" within the meaning of H.R. 13270
b. Take deductions subject to allocation under H.R. 13270.

SUMMARY

Subtitle A of Title III of H.R. 13270 is an emotional overreaction to advantages available, for good reasons, to a tiny number of taxpayers.

Removing these advantages will attack capital further and will drive away private support of worthwhile causes which need encouragement.

I. Make Haste Slowly.

II. Specific Short-Sighted Measures.

1. Accelerated Depreciation as Tax Preferences.

2. Excess Cash Basis Farm Losses as Tax Preferences.

3. Limiting the Deduction of Cash Outlays.

III. Tax Preferences and Allocable Deductions Appear Chosen Arbitrarily.

STATEMENT

Your relator, Walter N. Trenerry, of St. Paul, Minnesota, Attorney-at-Law and Member of the Minnesota Bar, respectfully states to the Honorable Finance Committee of the United States Senate:

While he does not favor all additions and changes created in the Tax Reform Bill of 1969 (H.R. 13270), your relator objects only to the matters in Subtitle A of Title III, which he mentions specifically here.

Your relator does object formally to all the following as unfair and shortsighted:

Title III. Subtitle A.

Sec. 301 (a) Limit on Tax Preferences (Proposed New Sec. 84 of the Code)
Sec. 302 (a) Allocation of Deductions (Proposed New Sec. 277 of the Code)

I. MAKE HASTE SLOWLY

Or, in the tongue of Caesar and Cicero, festina lente.

With all respect to the Committee, your relator feels that the authors of H.R. 13270 wrote these sections passionately, but not pensively.

An infinitely small number of Americans, among whom were Mortimer and Myra Moneybags, found lawful ways to avoid paying some or all of the income taxes which Uncle Sam wanted to extort from them.