HomeMy WebLinkAboutResolution 1081r
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Opposing 4a Tax Reform Proposals Currently Under Consideration by the United
States Congress- Elimination of Deductibility of State and Local Taxes and
tithe Distinction Between Tax-Exempt and Non Tax-Exempt Bonds
WHEREAS, on May 29, 1985, the United States Congress received recommended
tax reform proposals for "fairness, growth and simplicity"; and,
WHEREAS, included in the tax reform proposals are provisions which would
eliminate the deductibility of state and local taxes from federal
taxation, and,
WHEREAS, this change would be the most far-reaching revision in the federal
system of government since the Civil War and represents a funda-
mental change in the Constitutional doctrine of "reciprocal immu-
nity" among all levels of government; and,
WHEREAS, the repeal of local and state deductibility represents an in-
creased cost in the tax bill to the citizens of Fort Worth, as
well as the United States, and would, in effect, cause the price
of state and local government to increase indirectly which could
lead to further tax increases or service level reductions in much
needed programs during a time where inflationary costs are com-
bined with loss of federal financial assistance; and,
WHEREAS, the repeal of local and state tax deductibility represents double
taxation and negates deeply rooted historical principles by elimi-
nating a taxable level based on a person's ability to pay, and,
WHEREAS, this change could promote the expanded use of user fees in local
and state governments in an effort to finance services; and,
WHEREAS, the repeal of real property tax deductibility could serve as a
disincentive to home ownership, thereby reducing property tax col-
lections and contributing to declining property values or possible
relocation by taxpayers to areas of lower taxation.
FURTHER, also included in the tax reform proposal are provisions which
would provide a distinction between tax-exempt and non tax-exempt
governmental general obligation bonds which would eliminate or
limit the tax-exemption of state and local government bonds in-
cluding bonds issued by the City of Fort Worth; and,
WHEREAS, the proposed reforms, if enacted, would deny tax-exempt status to
bonds where the private sector benefits directly or indirectly
from the use of more than one percent of the proceeds of the bond
issue; and,
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WHEREAS, the change would eliminate all advanced refundings of tax-exempt
bonds, would restrict the investment of bond proceeds, and would
require that certain earnings from the investment of bond proceeds
be paid to the U. S. Treasury; and,
WHEREAS, this change would necessitate additional administrative costs as-
sociated with the filing of IRS information reports for every bond
issue and other IRS requirements, and,
WHEREAS, the changes would increase borrowing costs, and require a signifi-
cant increase in administrative responsibilities and costs for the
City of Fort Worth and the IRS, which would ultimately be passed
on to the citizens of Fort Worth.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FORT WORTH,
that the City opposes the elimination of state and local tax de-
ductibility from federal income tax liability and urges the entire
Congressional delegation, as well as the Chairmen and Committee
Members of the Senate Finance Committee and the House Ways and
Means Committee, to disregard this proposal, or any version there-
of, as a reasonable means of securing federal revenues because it
will adversely affect all citizens who pay state and local taxes,
including the citizens of Fort Worth;
BE IT FURTHER RESOLVED that the City opposes the distinction made between
governmental and non-exempt general obligation bonds and urges the
entire Congressional delegation, as well as the Chairmen and Com-
mittee Members of the Senate Finance Committee and the House Ways
and Means Committee, to disregard this proposal, or any version
thereof, as a reasonable means to generate federal revenues
because it would adversely impact all tax-exempt bond issuers and
purchasers if enacted into law;
AND BE IT FURTHER RESOLVED that the City Secretary forward copies of this re-
solution to the President of the United States and to the appro-
priate members of the United States Senate and the House of
Representatives.
Adopted this day 1985.
O
C Tr OF FORT WORTH