Resolution No. 2545
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RESOLUTION NO. .2545
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON
OPPOSING FE.DERAL TAXATION OF INTEREST DERIVED FROM
PUBLIC BONDS.
THE CITY COUNCIL OF THE CITY OF VERNON RESOLVES AS FOLLOWS:
WHE ltE AS, certain proposals have been made in connection with
fixing legislation whereby interest income from bonds issued by states or
their political subdivisions would be subject to federal income tax;
NOW~ THEREFORE, BE IT RESOLVED:
SECTION 1:
That the City Council of the City of Vernon
hereby expresses its opposition to any amendment of the Constitution of
the United States, or any other action by the Congress of the United States,
or the executive branch thereof, which would have the effect of subjecting
the income from state and local bonds to a federal tax or to cause the tax to
be increased because of such bond holdings by a taxpayer whether or not the
increase is in fact titled a tax.
SECTION 2:
,
That the City Clerk of the City of Vernon is
hereby directed to cause certified copies of this resolution to be forwarded
to the President and Vice President of the United States, to the. Speaker of
the House of Representatives, to the two Senators from the State of California,
and to the Congressman representing the 23rd Congressional District of
California.
SECTION 3:
That the City Clerk of the City of Vernon
shall certify to the passage of this. Resolution and thereupon and thereafter
the same shall be in full force and effect.
ADOPTED and APpROVED this 30th day of March, 1962.
~
ATTEST:
~Clerk
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1 ST ATE OF CALIFORNIA )
) SSe
2 COUNTY OF LOS ANGELES )
3
4 I~ F. A. ZlEMER, City Clerk of the City of Vernon, do hereby
5 certify that the foregoing resolution, being Resolution No. 2545, was duly
6 adopted by the City Council of the City of Vernon, and approved by the
7 Mayor of said City, at an adjourned regular meeting of the City Council
8 held on March 30, 1962.
F. A. Ziemer, City Clerk
-2-
SUPPORTING
DOCUMENTS
THE WHITE HOUSE
Dear Mr. Ziemer:
WASHINGTON
June II, 1962
Thank you for forwarding to President
Kennedy the resolution concerning the
tax tr eatment of State and local bond
interest. There is enclosed a memo-
randum on this matter which I hope will
be helpful.
Mr. F. A. Ziemer
City Clerk
Vernon, California
Enclosure
<~E.n:E
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7
T. . Reardon, Jr.
Special Assistant
to the President
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TAX TREATMENT OF INTEREST ON STATE AND LOCAL BONDS
"
As you may be aware, th~ President last year
directed the Treasury to undertake the preparation
of a broad program of tax reform aimed at eliminating
existing tax inequities, at simplificatiOQ of our tax
law, and at creating the opportunity for significant
reduction in tax rates by broadening the base of
income" subject to taxation. This study is still under
way.
In considering whether changes should be proposed
in the existing tax treatment of any form of income,
the far-reaching consequences of such changes must
always be considered. The issue of taxation of interest
on State and local bonds raises some especially complex
questions. We know, for example, that the present tax-
free status of such interest is particularly advantageous
to upper-bracket taxpayers. On the other hand, however,
the advantages of tax-free treatment to State and local
governments are clearly' recognized. .
In exploring this area, the Treasury Department
-will bear in mind the financial problems of State and
local governments and their need to be assured of
. adequate markets for their securities at reasonable.
interes~ rates.
.
-.'-
THOMAS H. KUCHEL A
CALlFORj~.,......... ~~.'~~[nit"l) ~t4fe.. ~enate
r-~ %~? WASH'NG=N~;C~4, 19Ce
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efn C"_~;'"
Mr. F. A. Ziemer
City Clerk
4305 Santa Fe Avenue
Vernon 58, California
Dear Mr. Ziemer:
I am glad to have your resolution in support of'
retention of the exemption from taxation of the interest
derived from bonds issued by state and local governments.
I agree with you completely on this matter, since I think
it is essential to preserve this exemption in order to
adequately finance the governmental services which are
required by our fellow citizens.
I have enclOSed a statement which has been sent
to me by .tl.ssistant Secretary of the Treasury, Stanley S.
SUrrey. I assure you that I shall vigorously oppose any
at tempt to repeal this exemption should. such an attempt
be made.
With kindest regards,
\~1y{r.Lw
THOMAS H. KUCHEL
United States Senator
K:Hh
TAX TREATMENT OF INTEREST ON STATE AND LOCAL BONDS
As you may be aware, the President last year
directed the Treasury to undertake the preparation
of a broad program of tax reform aimed at eliminating
existing tax inequities, at simplification of our tax
law, and at creating the opportunity for significant
reduction in tax rates by broadening the base of
income subject to taxation. This study is stilI under
way.
In considering whether changes should be proposed
in the existing tax treatment of any form of income,
the far-reaching consequences of such changes must
always be considered. The issue of taxation of interest
on State and local bonds raises some especially complex
questions. We know, for example, that the present tax-
free status of such interest is particularly advantageous
to upper-bracket taxpayers. On the other hand, however,
the advantages of tax-free treatment to State and local
governments is clearly' recognized.
In exploring this area, the Treasury Department
will bear in mind the financial problems of State and
local governments and their need to be assured of
adequate markets for their securities at reasonable
interest rates.
~~~i;
..., ~'~':?:*I;. '-,
",'
;.,.' -' ..."'....ARD B. RUSSELL, GA., CHAIRMAN
HARRY FLOOD BYRD. VA. LEVERETt' SALTONSTALL, MASS.
JOHN STENNIS, MISS. MARGARET CHASE SMITH, MAINE
STUART SYMINGTON, MO. FRANCIS CASE. S. DAK.
HENRY M. JACKSON. WASH. PRESCOTT BUSH, CONN.
SAM J. ERVIN, JR., N.C. J. GLENN BEALL, MD.
STROM THURMOND. S.C. BARRY GOLDWATER, ARIZ.
CLAIRENGL.E, CALIF.
E.L.BARTLETT,ALASKA
HOWARD W. CANNON, NEV.
ROBERT C. BYRD. W. VA.
~Cnitea ~{a{e$ ,$enate
COMMITTEE ON ARMED SERVICES
April 11, 1962
HARRY L. WINGATE, JR., CHIEF CLERK
Mr. F. A. Ziemer
City Clerk
City Hall
4305 Santa Fe Avenue
Vernon 58, California
Dear Mr. Ziemer:
This will acknowledge receipt of your c011lllUnication
regarding the tax-exempt status or State and municipal
bond interest.
This matter has previously been called to my attention
and I am enclosing for your information a report that has
been provided me on the subject.
You will note Mr. Surrey's comment that,... ttthe tax-
exemption feature of State and municipal bonds is in no way
diminished by the Treasury Department regulations. 'I
Beyond this, I find that no Congressional action to
revise current procedures is contemplated.
With best regards,
~.. i..n. cer. ~~ur.s,..,.......,
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CLAIR ENGLE
U. S. SENATOR \~J
Enclosure
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JAN 2 2 1962
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Detar )(r. ~:JOdbury:
T'D.1a 1. in repl)' to ~ lettc' to P.roc~da:rt ~~, 4titclt '. ~
DcCet10ar ~3.. 1%1. rc:toelU'UQ3 tho t.~-~ Gt4~ o:r &tu.te cr.rA
mu::ie1:pal bo:2d iUterest. In ~ let.ter, 'JOU.1~oat.e' t.te.~ t.bo
'IJ:"e~'Y ~"'t."l1Cnt, bAa QOVC(l.'to ta.;.; 'b~" rmdUfo 1~
~c:s em the1%' =mic1pdJ. ~ bol41nga.'tOl.l ~t, t.bIdf "
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J:".m101pal bead 1Aterat v1tbou.t .,muUOD.b:f .,.y of a p:o~UoA
theor;y. ". .
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'l'be Liter ~~~~ :rDCO'4:lC,~,l.ct: ~ ~9.prov1~~1S "
~~ to..~ (b~C'i en tJ. ca:s.p4.'1",j' 0 aarnl~aex,per1cmce oy.,l". ,
.. tlft-ycaAr period) tor ,)lr*t1D:s 04'~. caap~'. 1r.v~tcent:.
lAC011lt bet~tl tbo pol1~ nt~ end the .~ 1tO<.tU. ,. .:
0nl1 tl::.:l.t part at t.be 1.aca:&rt ..:u.ocabla to the .~. 1. "'~J.ct.to
t.ux. In dct~1't'dnUJ.s the. re;.::-ec::t1vo l'&J'te/t~"e~yt.iI1teJ'eat i"'ra;:
8ta.te eM ~..1e1pcU. bo~ 111 olloct\;e-d. an the ~ ~a.ri18 U otl~
1tG:J or 1t:'testDottt 1nCCllMt.. hq ta;c..ier~ln~ra.t a.Uoe~Wd to
the ~'a uh:-ze 1. exol.ukd tr:)Ql its tl:"" boo.. .Tho 1959 A~
W~ includes " pt"OY,lac thrAt, 1:t tbd. OperatiOn attM ete.tutorf
~tion E~ resultG 1U the LrtOOC1.t.1on or tax CO ~-ta:r~~t
ztate erA. r.r.m1cl.pal bon4 1ntonst.# than:en ~WJtacct muat be w\4c
to el1n1M'te tbo.t tax.
~ Tre~ury DepartaMmt.. ~tl~ona %VJlut!~ to ~~ p:ovlni,JrnS
eJ.ooely to.:l.lov tbo at.atutorJ ~rtt. In conf'orm1ty v1tb.t:ho"1~)9
Act, thc:::e rC,t."lth;.t1onC "rovitlt.t thLt ~ll tr-;';:-CX~it 1~tcre:;t ,U'C:c'.;l
to tbll Cr~t"''"\:l!tD ~~ r4 tbc tlTli~Si;..t\(;'1~t l:lca:\e 1a'.:rully c.;u:..r,:>t.ed :TW
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e:(preD~' l'OQ11l1.ng tbti.t. ca' tuSJua~ JaaGt bo ~ under thca provt.::.o.
c.l:l1::;e 11' 1tis eDt&bl1ahedln tU1Y ca.ae tbl.l.~ tho e....."ltc~t.1Ct\ Ot tt.o
otber tltnt'ltol":I provtalo::S nf:ultlJ U tho ~lt1on or Ii'. t&.--: Ol.l~e."':-
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at sect10n 26S(2) ot' tb6 tntema1 &venu~ C~'et i9SJ.:. 't.~ve ~: .l~l;:ic~:.l:.:"'_
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to interest p&1ti on indebtedness repre"ented:by deposj,tcin banka, e.Qg~ed
1D the general bAP\"'~bu8w.a since,8uob 1nd.ebtednU81a no~c.6~ed
to be R1nclebted.Dea. ~ or cont1nu.ecl, to Purch&t. 0.' C&ri"Y
obl1gat1Qna * * .. .V1th1n the JleaDingot aeet1Dl2 265.. The~.
ap~ tA&t HOt1on 265(2) pro'V1de. tor the no"_b1l1t,y of
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1Dieren an 1aUbtednU. iJJcurred to PurchU. or ol::Tl'Oert&1n. ocltga~1ons
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On 1Ih1ch the intereat ~ ,Ctalpt n-Ga. Federal ~Dl8 tax, I
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The Sen1o. _tilted. that although t4ia ~ 10,. been tba po.~Uon
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at tbe Nat1]')1W. Of'i"ice at tl1~Serv1C'1 no ~c1t1c p'Q.bl1c~tJ.on ot thia
" po1Dt hid beeD aide.
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X"neSen1o. M1c1 'Uaat ita azmounCfJllent %'e.1d~ .from its conz~csrat..1on
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ot a request tor. a4Y.1ce .from a t1eld. o.t1'1ce where the probLem ~
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April 7, 1962
F. A. Ziemer, City Clerk
Office of the City Clerk
Vernon 58, California
Dear Mr. Ziemer:
I have for acknowledgement your letter of April 2, 1962,
transmitting to the Congress, "A R~ solution of the City Council of
the City of Vernon Opposing Federal Taxation of Interest Derived
From Public Bonds. "
CLYDE DOYLE
MEMBER 01" CoNGRESS
CALIFORNIA
(79TH, 81sT, 820, 830, 84TH, 85TH,
86TH, AND 87TH CoNGRESSES)
If) ;;.:r'l7S'
~
RESIDENCE:
SOUTH GATE, LOS ANGELES COUNTY
CALIFORNIA
23D CONGRESSIONAL DISTRICT OFFICE:
2710 ZOE STREET
POST OFFICE BUILDING
HUNTINGTON PARK, CALIFORNIA
PHONE: LUDLOW 3-5230
WASHINGTON, D.C., ADDRESS:
1030 NEW HOUSE OFFICE BUILDIN.G
PHONE: CApITOL 4-3121
EXT. 3576
~ongttss of tbt I1nittb ~tatts
.ou~e of l\epre~entatibe~
.a~ington, J9. (tI;.
April 9, 1962
CALIFORNIA STATE LEGISLATURE
ASSEM8LY DISTRICTS:
520, 55TH, AND 69TH
COMMITTEES:
ARMED SERVICES
UN-AMERICAN ACTIVITIEs
IN REPLY REFER TO
SUBJECT OF
The Honorable Mayor and City Council
City of Vernon
Ci ty Hall
4305 Santa Fe Avenue
Vernon 58, California
fl.... tC.Ei. 'l^'
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A. 21(: !,4Pt;?
Crry Ct~;
Dear Friends:
Thank you for mailing me certified copy of your Resolution NQ. 2545,
being a Resolution of the City of Vernon Opposing Federal Taxation of
Interest Derived From Public Bonds; this Resolution being adopted by
the City Coucil of Vernon at its meeting held March 30, 1962.
I think the presently most helpful way I can communicate your expres-
sion of concern is to personally transmit this direct to the personal
attention of the Chairman of the House Ways and Means Committee. This
I will gladly do.
If there is further wayin this matter - or any other -
I can be helpful, I cordially invite you to call it to
CD:mt
Cordi
ssional
Coun ty
OUR BELOVED NATION DESERVES THE BEST OF
TEVER WE ARE
. .
'*'- '--'-
CLYDE DOYLE
MEMBER OF CONGRESS
CALIFORNIA
(79Tlf, 81sT, 820, 83D. 84TH, 85TH,
86TH, AND 87TH CONGRESSES)
.~
RESIDENCE:
SOUTH GATE, LOS ANGELES COUNTY
CALIFORNIA
23D CONGRESSIONAL DISTRICT OFFICE:
2710 ZOE STREET
POST OFFICE BUIL.DING
HUNTINGTON PARK, CAL.IFORNIA
PHONE: LUDLOW 3-5230
(tongrtss of tbt I1nittb j;tatts
Jj.G J)ou'e of l\epre'entatibe'
,. .a~iugtout iI. ~.
~Sf~
CALIFORNIA STATE LEGISLATURE
ASSEMBLY DISTRICTS:
52D, 55TH, AND 69TH
WASHINGTON, D.C., ADDRESS:
1030 NEW HOUSE OFFICE BUILDING
PHONE: CAPITOL 4-3121
EXT. 3576
May 3, 1962
IN REPL. Y REFER TO
SUBJECT OF
4t4r .i~ r:
~fl~/ 1.9&< $fl~
~.t/~Ai.A.<::._ .
~€.'J/"ry, .
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The Honorable Mayor and City
Ci ty of Vernon
City Hall
4305 Santa Fe Avenue
Vernon 58, California
CoWlcil
Dear Friends:
Promptly upon receiving your valued communication and certified
copy of your Resolution No. 2545 regarding Federal taxation on
municipal debentures, etc., I asked the distinguished Chairman of
the Ways and Means Committee to give me a written statement on that
subject which I could promptly forward to you.
It is enclosed herewith. Trusting this commWlication by Chai
Mills to me is fOWld informative and of guiding use and value
and if it is not kindly let me know - I have the honor to be,
CD:mt
OUR BELOVED NATION DESERVES THE BEST OF
TEVER WE ARE
l ..
~ .
EIGHTY-SEVENTH CONGRESS
WILBUR D. MILLS, ARK., CHAIRMAN
CECIL R. KING, CALIF. NOAH M. MASON, ILL.
THOMAS J. O'SRIEN, ILL. JOHN W. BYRNES, WIS.
HALE BOGGS, LA. HOWARD H. BAKER, TENN. COM TT 0
EUGENEJ. KEOGH. N.Y. THOMASB.CURTIS,MO. MI EE N WAYS AND MEANS
BURR P. HARRISON, VA. VICTOR A. KNOX, MICH.
FRANK M. KARSTEN, MO. JAMES B. UTT, CALIF.
A. S. HERLONG, JR., FLA. JACKSON E. BETTS, OHIO HOUSE OF REPRESENTATIVES
JAMES B. FRAZIER, JR., TENN. SRUCE ALGER, TEX.
WILLIAM J. GREEN, JR., PA. STEVEN B. DEROUNIAN, N.Y.
JOHN C. WATTS, KY. HERMAN T. SCHNEEBELI, PA. WASHINGTON. D.C.
AL ULLMAN, OREG.
JAMES A. BURKE, MASS. WILLIAM H. QUEALY,
CLARK W. THOMPSON, TEX. MINORITY COUNSEL
MARTHA W. GRIFFITHS, MICH.
LEOH.IRWIN,CHIEFCOUNSEL April 18, 1962
JOHN M. MARTIN, JR.,
ASSISTANT CHIEF COUNSEL
GERARD M. BRANNON,
RAYMOND F. CONKLING,
ALFRED R. MCCAULEY,
PROFESSIONAL STAFF
The Honorable Clyde Doyle
House of Representatives
Washington, D. C.
f\\l\\ 25 \\tc'll
Dear Clyde:
This is in reply to your letter of April 9 relating
to the treatment of interest on State and loca1 bonds.
In a general way, there has been discussion as to
whether or not there would be recommendations in the
President's general tax revision message dealing with the
treatment of interest on State and local bonds. I am not
in a position to say whether or not there will be any
such recommendation.
Separately from this, there has been some discussion
of this issue in connection with the taxation of the income
of life insurance companies. The problem in that case has
to do with a formula provided in the Life Insurance Company
TaE Act of 1959 which attempts to set out a way of pro-
viding the whole tax-exempt treatment for life insurance
companies on State and local bond interest without pro-
viding at the same time a double exemption. This is a
problem in the life insurance area because, to a large
extent, the companies are investing policyholder funds and
are taking a deduction for interest income which they credit
to po1icyholders.
The Committee on Ways and Means provided language in
the Life Insurance Company Tax Act of 1959 dealing with this
problem and there has been a certain amount of discussion as
to Treasury Department regulations under this statutory
.
.. ',"
.. ... ,......._,~
The Honorable Clyde Doyle
Page 2
language. That matter is not presently before the
Congress.
Sincerely yours,
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Wilbur D. Mills
Chairman
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BE!Rr A. BETTS
TREASURER
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"F. A. ZIEMER
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STATE OF CAL.IFORNIA
OFFICE OF THE
mr~asur~r
SACRAMENTO 9
February 26, 1962
Honorable R. J. Eurlong
Mayor of Vernon
MAR
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of the City Council: ,~/~ .
Dear Mayor and Members
At the last regular session of the California LegislatuJ;'e (1961)
both the Senate and Assembly adopted Senate Joint Resolution 'No. 42,
relative to federal income taxation of the interest derived from public
bonds. A copy of the resolution is attached for your convenience.
You will note, and probably you are aware already, that the resolu-
tion memorializes the President and the Congress of the United States to
oppose any amendment of the U. S. Constitution, or any other action by
Congress or the executive branch, which might subject the income from
state and local bonds toa federal tax or to cause the tax to be increaSed
because of such bond holdings by a taxpayer whether or not the increase
is in fact titled a tax.
I believe you will agree, as the head of a local government body"
that any federal taxation of the interest on bonds in California would
hea serious deterrent to the many bond-financed programs so vital to
the continued needs of this State and its communities.
As the legislature's resolution indicates, federal taxation of such
bond interest, as income, would curtail construction of needed publiC
improvements, such as the building of schools, highways, and water and
sewer systems and would cause either tax increases by the State and its
political subdivisions or would result in the federal government assum-
ing the responsibility of financing such improvements.
Certainly a resolution from your council in opposition to a federal
tax on these bonds would impress our national leaders and representatives
in Congress, and would do much to counter any move to impose such a tax.
As the state officer charged with the responsibility for the sale of
California general obligation bonds, I earnestly recommend a thorough
study of the legislature's resolution by your council, and request that
your collective consideration be given to your own adoption of such a
resolution to the President and Congress.
Very truly yours,
~Ct~~
Bert A. Betts
State Treasurer
CITY OF VERNON
CALIFORNIA
April 2, 1962
The President
The White House
Washington 25, D.C.
Mr. President:
Enclosed you will find a certified copy of Resolution No.
2545 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON
OPPOSING FEDERAL TAXATION OF INTEREST DERIVED FROM PUBLIC BONDS,
which was adopted by the City Council at its adjourned regular
meeting held March 30, 1962.
Yours respectfully,
CITY OF VERNON
F. A. Ziemer,
City Clerk
FAZ:lw.
enc.
CITY OF VERNON
CALIFORNIA
April 2. 1962
The Vi~e President of the
United States
The United States Senate
Washington 25. D.C.
Dear Sir:
Enclosed you will find a certified copy of Resolution No.
2545 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON
OPPOSING FEDERAL TAXATION OF INTEREST DERIVED FROM PUBLIC BONDS,
which was adopted by the City Council at its adjourned regular
meeting held March 30, 1962.
Yours respectfully,
CITY OF VERNON
F. A. Ziemer,
City Clerk
FAZ:lw.
enc.
CITY OF VERNON
CA.LlFORNIA.
April 2, 1962
The Honorable John MCCormick
The Speaker of the House of
Representatives
Washington 25, D.C.
Dear Sir:
Enclosed you will find a certified copy of Resolution No.
2545 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON
OPPOSING FEDERAL TAXATION OF INTEREST DERIVED FROM PUBLIC BONDS,
which was adopted by the City Council at its adjourned regular
meeting held lIarch 30,1962.
Yours respectfully,
CITY OF VERNON
F. A. Ziemer,
City Clerk
FAZ: lw.
enc.
CITY OF VERNON
CA.LlFORNIA
April 2, 1962
The Honorable Thomas H. Kuchel
The United States Senate
Washington 25, D.C.
Dear Sir:
Enclosed you will find a certified copy of Resolution No.
2545 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON
OPPOSING FEDERAL TAXATION OF INTEREST DERIVED FROM PUBLIC BONDS,
which was adopted by the City Council at its adjourned regular
meeting held March 30, 1962.
Yours very truly,
CITY OF VERNON
F. A. Ziemer,
City Clerk
FAZ:lw.
enc.
CITY OF VERNON
CALIFORNIA
April 2, 1962
The Honorable Claire Engle
The United States Senate
Washington 25, D.C.
Dear Sir:
Enclosed you ~ill find a certified copy of Re$olution No.
2545 - A RESOLUTION OF THE CIn COUNCIL OF THE CITY OF VERNON
OPPOSING FEDERAL TAXATION OF INTEREST DERIVED FROM PUBLIC BONDS,
which was adopted by the City Council at its adjourned regular
meeting held March 30, 1962.
Yours very truly,
CIn OF VERNON
F. A. Ziemer,
City Clerk
FA2.:1w.
enc.
~
CITY OF VERNON
CALIFORNIA
April 2, 1962
The Honorable Clyde Doyle
1030 NewHouse Office Building
Washington 25, D.C.
Dear Sir:
Enclosed you will find a certified copy of Resolution No.
2545 ... A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON
OPPOSING feDERAL TAXATION OF INTEREST DERIVED FROM PUBLIC BONDS.
~hich was adopted by the City Council at its adjourned regular
meeting held March 30, 1962.
Yours very truly,
CITY OF VERNON
F. A. Ziemer,
City Clerk
FAZ: lw.
enc.