THEODORE R. MCKELDIN, GOVERNOR 2077

WHEREAS, such taxation and potential future taxation would
violate the principle of inter-governmental immunity which
is the keystone of our Federal system of government and the
relationship between the several States and the central govern-
ment, with the inevitable result in the long run of weakening
the ability of local government to perform the essential serv-
ices required of it for the welfare of its citizens; and

WHEREAS, the weakening of local government increases the
the tendency to centralization and a strong central government
to an unhealthy degree; and

WHEREAS, the taxation of State and municipal bonds would
greatly increase the cost of financing public works by the rais-
ing of interest rates and, to this extent, would hamper the
performance of the functions of local government; and

WHEREAS, the effect of the raising of interest rates in these
times, when the decreased purchasing power of the dollar
makes the cost of public construction many times what it has
been in the recent past, would multiply the evil effects; and

WHEREAS, the taxation of the income from future interest of
government bonds would, for many years, result in a negligible
increase in the income of the Federal government, the estimate
is that the yearly issue of such bonds is approximately One
Billion Dollars, with an average interest rate of less than
three per cent. (3%), and the income from said bonds would
be about Thirty Million Dollars a year, of which scarcely
more than Ten Million Dollars would flow in taxable income
to the Federal government by reason of the holding of many
of such issues by tax-exempt institutions and funds; and

WHEREAS, this practical increase in Federal revenues is so
negligible, and the potential evil of the taxation of State and
local bonds is so great and so pernicious; now, therefore, be it

Resolved by the General Assembly of Maryland, That the
State of Maryland is emphatically opposed to the Federal
taxation of State and local bonds, and requests the Congress
to defeat the proposal of the Treasury Department for the
taxation of such bonds; and be it further

Resolved, That the Senators and the Members of the House
of Representatives are hereby requested to give active opposi-
tion to all pending and proposed measures which would subject
State and municipal bonds to Federal taxation; and be it
further