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P.O. BOX 3485 AUSTIN, TEXAS L. Our ‘new. romances for the steak-lover. Tonight fall in love with our delicious continental , steaks. Choose from the German, French, Russian, Japanese, Greek,. Italian, and Hungarian steaks, each prepared in its own special way and served with an appropriate crepe and salad. head St. 314 Eost 6th Sr. state and local tax-exempt bonds. They provide a twofold benefit: the interest paid to depositors and policyholders is tax-deductible, while the interest earned from the bonds is tax free. The commercial banks also get to write off expenses incurred in the administration of their bond departments. Further, in 1970, the Internal Revenue Service ruled that banks could borrow money to buy tax-exempt bonds and deduct the loans’ interest from taxes. In 1973, for instance, Texas Commerce effectively reduced its tax liability from 48 percent to 21 percent by deductions allowed from tax-exempt interest in investment securities. Calculated at a 48 percent rate, Texas Commerce’s taxes were $12,979,000. Its deductions on tax-exempt interest on municipal bonds totaled $6,756,000. Other deductions amounted to $553,000. The deductions from tax free interest on municipal bonds cut Texas Commerce’s tax obligations by more than half. Municipal bonds provided the same tax shelter for First City’s profits. At 48 percent, First City’s tax liabilities were $12,727,000 but it had deductions for tax-exempt bonds of $7,359,000. First City computed its 1973 income tax obligation as being $5,578,000. But it actually paid in only $1,773,000 and deferred payment on $3,792,000. ANOTHER OF Houston’s biggest banks, Houston National, also enjoyed substantial tax benefits because of its municipal bond holdings. According to records filed with the Securities and Exchange Commission, Houston National Company, which owns Houston National Bank, received an income tax credit of $297,000, which was $1,617,000 less than taxes computed at the statutory tax rate of 48 percent. The Houston Company’s principal stockholder is Tenneco Corp. The Federal Reserve Board is presently considering the proposed acquisition of the Houston Company by Republic of Texas Corp., the second largest bank holding company in the state. Banks make their money not only from interest on loans but also from investments in securities. By law, they are not allowed to buy corporate stock, and they rarely buy corporate bonds. But they can buy notes and bonds issued by federal, state, and local governments. The investments of Houston’s three super banks run about a fourth to a third of the total earning assets of those banks. A portion of those securities investments are more or less involuntary because all U.S. Treasury deposits and most deposits of state and local governments must be matched by holdings of government securities of some sort. The rest of the investment portfolio divides up between securities held briefly to provide liquidity to assure that if depositors come around for cash or send money to other banks the bank will have assets easily saleable for cash and securities held on a longer term to provide profits. The banks’ profit makers are the state and municipal bonds. They sell to yield the banks only about 70 percent as much as Treasury issues of equivalent length. But the earnings from them are tax free. That means that each interest dollar on a state or municipal investment is worth roughly twice as much as each dollar on a Treasury investment. In addition to municipal bonds, there are other tax advantages that allow the banks to continue growing and prospering while paying an effective tax rate far below the statutory rate. For instance, the property tax collection process is shaped to the advantage of commercial banks, savings and loan associations, and big bond brokers. The property taxing bodies in Houston and Harris County collect their taxes only once every year. Most homeowners, however, have to pay their property tax to their banks or savings and loans in 12 monthly installments, along with their mortgage payments. The lending institutions put their payments into so-called “escrow accounts” and invest them. But they pay no interest to the homeowner, nor does the homeowner get a discount for making his payment early. While the lenders are getting free use of these funds, amounting to millions of dollars in the city and the county, the taxing jurisdictions to which they rightfully belong are running short of cash. What do these jurisdictions do to meet their payrolls and bills? They go to the commercial banks and bond brokers for high-interest, short-term loans, called “tax-anticipation warrants” and for longer-term “working-cash fund bonds.” How sweet it is to be in the Houston banking business. Classified advertising is 20d per word. Discounts for multiple insertions within a 12-month period; 26 times, 50%; 12 times, 25%; 6 times, 10%. BOOKPLATES. Free catalog. Many beautiful designs. Special designing too. Address: BOOKPLATES, P.O. Box 28-1, Yellow Springs, Ohio 45387. PLAYING THE RECORDER IS EASY. Free catalog, best recorders, recorder music. Beginner’s Pearwood Soprano Book, $11.95. Amster Music, 1624 Lavaca, Austin. GUITAR PICKERS. Buy your guitar strings from us and save 20%. Mail orders accepted. Amster Music, 1624 Lavaca, Austin. JOIN THE ACLU. Membership $15. Texas Civil Liberties Union, 600 West 7th, Austin, Texas 78701. Sept. 19, 19 75 13 Happiness I. Is Printing By 1? IFIT URA BOOK-HUNTING? No obligation search for rare or out-of-print books. Ruth and John McCully. Austin, Texas 78703. NEW ORLEANS ON $8 A YEAR. The Weekly Courier, 1232 Decatur, 70116. GENERAL HOME AND AUTO REPAIRS. Jim THE NEW YORK TIMES Sunday edition delivered to your home in the Dallas area. Call 239-5235 for rates and information. WANTED. Political campaign buttons and memorabilia. National or state. George Meyer, 2204 Matthews Dr., Austin 78703, or phone 478-2848. N ewspapers Magazines Political Specialists Signs and Placards Bumperstrips Office Supplies 100% Union Shop PRESS FM Phone 512 /442 7836 1714 SOUTH CONGRESS CLASSIFIED Armai 11111.1,