Threat

For 21 years fiscal experts of every U.S. administration have advocated ending the tax exemption of Federal. State and municipal securities. Reasons: 1) it would close an avenue of surtax escape to the rich, 2) would halt the diversion of capital from productive private enterprise, 3) would discourage extravagant borrowing by local governments. But to New York City's peppery little Mayor LaGuardia, head of the U. S. Conference of Mayors, the whole idea is ugly.

For him and his fellow mayors it would mean paying more for the money they borrow. Last week he told a House committee that ending the tax exemption would destroy the credit of U. S. municipalities. More interesting than his arguments was his threat: "If you tax the bonds of the City of New York, I'll tax every bit of real estate the Federal Government owns in New York. And I'll collect, too."

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