IDA PRESS 1 901 W 24th St Austin Multi copy service. Call 477-3641 Personal Service Quality Insurance ALICE ANDERSON AGENCY INSURANCE & REAL ESTATE 808A E. 46th, Austin, Texas 465-6577 Sanford was much annoyed by a chart drawn up by Aleshire which showed that bank holding companies were being treated differently, under the proposed bill, from all other Texas corporations. “It’s comparing apples and oranges,” he complained. “The point is that if you don’t have this language in the bill, bank holding companies will be treated differently from all other holding companies.” THERE WAS another problem with the fiscal note on the bill, the mandatory estimate on each bill as to how much it will cost the state. The fiscal note on both the first and second printings of the bill said the bill had “no fiscal implication,” i.e., it would not alter the amount of revenues brought in by the tax. But Denton had been told by the comptroller’s office that the language exempting the dividends and interests of banks would mean a loss of $2 million. In the subcommittee hearing, Marinas himself said, “It’s not a lot of money, but it’s a lot of money for a few people. I would say $2 million a year.” Wyatt at that time seemed to understand what the fiscal implications were. He asked Marianas, “When does the federal statute [giving states the authority to treat banks like other corporations] go into effect?” “It is in effect now,” replied Marians. “It has franchise tax effect in 1974.” “Then we have from now ’til January to either change the law or really hit 10 or 12 people a big lick,” said Wyatt. However, during the floor debate, Wyatt said, “If the comptroller told Mr. Denton that the bill is going to cost $2 million, he sure lied to me and Mr. Doyle and the committee.” The bill remained on the “postponed business” list all day Monday and indeed, for the remainder of the session, despite persistent rumors that it was going to rise again. Doyle and Wyatt apparently concluded that they didn’t have the votes on the thing, or at least that the opposition had the votes to excise the bank holding company provision. If the Legislature had passed the recodification and eliminated the special interest provision at the same time, there would be no question about legislative intent in the matter and the bank holding companies would have a difficult time with a court suit. According to Marinas, they plan to bring one, since they could not solve their problem through the Legislature. He said during the hearing, “I don’t think the State of Texas or the banks want to go to the courthouse.” A companion bill was being carried in the Senate by Max Sherman of Amarillo, but never got to the floor. Rep. Paul Ragsdale of Dallas contacted Sen. Bill Patman, who, like his daddy Wright, is a longtime bank watchdog, and Patman threatened to filibuster on the bill. “I think we could have carried it in the Senate,” said Sanford, “because there are only 31 senators and you can sit down with each one and explain the thing. They say this is like Sharpstown, but the whole trouble with the Sharpstown bills is that no one ever explained. My God, I’ve explained this thing at least 311 times.” Probably an accurate estimate. Sanford was kind enough to give the Observer the full five-course treatment in four-part harmony, lasting 45 minutes. Sanford’s explanation comes complete with diagrams even the simple-minded can understand, not to mention 27 8×10 colored glossies with circles and arrows and a paragraph on the back of each one . . . It goes thusly. In the beginning, God created the franchise tax. Then the feds went and passed a law saying effective Jan. 1, 1973, for state tax purposes, national banks shall be treated as though they were citizens of the state. Actually, the feds went and did that because of a 1968 Supreme Court decision . . . but that’s another story. Anyway, bank holding companies are now subject to the state franchise tax. Because of the peculiar way the tax is collected, that won’t matter until June, 1974. Now. You understand that this situation is sort of accidental, it’s something nobody here had any control over and nobody here intended for it to happen. Nobody meant to do this to bank holding companies. It’s difficult to put a franchise tax on banks because money and stock are intangible assets. [That’s what the man said.] There are very few pure holding companies. Most of them have some working capital as well as subsidiaries. A pure holding company creates no new capital, it just sits there and collects what its subsidiaries make. Dividend income from a subsidiary is not new capital, really. It’s income and Texas doesn’t have an income tax. Now banks are singled out from all other holding companies. We’re put in a different position from all the rest. Why us? And the worst of it is that nobody meant to do this to us. Sanford’s explanation is a masterpiece of its kind. Unfortunately, after he makes his eloquent plea for bank holding companies to be treated like all other holding companies, he then launches into a new 45-minute lecture on why bank holding companies are different from all other holding companies and shouldn’t be treated the same. There are a few other holes. Sanford insists that 918 was not is not an effort to exempt bank holding companies from the franchise tax. It just exempts their interest and dividends. However, the vast majority of the assets of a bank holding company are precisely in interest and dividends. On May 25th, the last rumors of H.13. 918 coming up for a vote spread and then died with the closing gavel. By that time the bill was known simply as “the bank holding company bill” and had Special Interest stamped all over it in the minds of most members. The opposition preened itself on having killed a baddie. Coleman and Sanford, still insisting that it was a good bill, went off to Scholz’s to drown their sorrow. And H.B. 918 went off to join the shield bill, Joe Wyatt’s redistricting bill and unitary primaries in the ghostly ranks of whatever elephant graveyards hold unpassed legislation. M.I. June 15, 1973 17 .4101.14N1110.1111111p*O1111.$41M4.1 0111111.11 . 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