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RESOLUTION OPPOSI~D ~ TAXATION OF MO~IICIPAL BO~.DS. W~LREAS, Cor~ess is being urged to impose federal income taxes on the interest paid on muricipal bonds; and WHEREAS, the imDosition of such a tax could ~have dire consequences on the financial affairs of a municipality; and ~V~EAS, it is important that Co~sress be fully irm~ormed in this matter before t~ki~ action that would adversely affect local government t~kroughout the nation. NOW, THIn, FORE, BE ITRESOLXZEDby the Council of the City of Portsmouth that it hereby most stroD~ly urges the Congress of the Ur~ited States of America not to enact any law imposing federal income taxes on mmnicipal bonds for the follo~ngreasons: Such an act would be of doubtful constitutionality, and this would virtoal!y create a moratorimm on borrovm[p~ by m~unicipalities pendi~ the final out- come of the necessary litigation to resolve this question. e Some investors would be co~pelled to ~nload large holdir~s of municipal bonds, thereby flooding the bond market and adversely affectS_rig the interest rates on municipal bonds. Subjecting~ mur~cioal bor~s ~o taxation would olace such bonds in direct conI0etition v~th private cor- porate issues for the l~mited amount of ~kunds avail- able for investment. If the income from municipal bonds is subjec~ to taxation, theywould b~ve to bea_~ b~her interest ra~es in order to give the investor the same yield he would receive ~rom them mnder their presenv t~x exerapt status. This would force municioalities to either raise taxes to pay the ~hi~aer ip£erest rates or to defer needed local improvements ~nd pro~ects. BE IT ~ ~ ~RESOL~ tbmt the City Clerk is hereby directed to fo~ard a cooy of t~his resolution to each raamber of oor~ss from