On March 8, 156 members of Congress sent a letter to the leadership of the House Ways and Means Committee in support of preserving the tax-exempt status of municipal bonds in comprehensive tax reform. Last month, NACo sent an action alert to our members asking you to contact your Representatives and urge them to sign on to the letter. Tax-exempt municipal bonds remain the primary method used by states and local governments to finance public capital improvements and public infrastructure projects that are essential to creating jobs, sustaining economic growth and improving the quality of life for Americans in every corner of this country.
The letter, circulated by Reps. Randy Hultgren (R-Ill.) and Dutch Ruppersberger (D-Md.), focused on the vital role municipal bonds play in our nation’s infrastructure and their impact on American citizens and business. “Nearly two-thirds of core infrastructure investments in the United States are financed with municipal bonds,” the letter says, adding, “Millions of Americans depend on municipal bonds for their economic security, and invest in them because of their low-risk nature.” Any changes to the tax-exempt status of municipal bonds that would increase the cost of financing for states and local governments – including counties – should “be provided very careful consideration,” according to the letter.
As tax reform and infrastructure discussions advance on Capitol Hill, proposals that would cap certain tax benefits, including the exemption for municipal bond interest, remain on the table as Congress looks to offset the costs of lowering both individual and corporate tax rates. The House Ways and Means Committee continues to work on a comprehensive tax reform package and could finalize details in the weeks and months ahead.
Between 2003 and 2012, counties, states and other localities invested $3.2 trillion in infrastructure through long-term tax-exempt municipal bonds, 2.5 times more than the federal investment. During that decade, state and local jurisdictions financed $514 billion in construction of primary and secondary schools; nearly $288 billion of financing went to general acute-care hospitals; $258 billion went to water and sewer facilities; roughly $178 billion in roads, highways, and streets; $147 billion to public power projects; and $105.6 billion to mass transit.
NACo will continue to monitor any developments related to municipal bonds and advocate for their tax-exempt status on behalf of America’s counties.
Contact: Jack Peterson at firstname.lastname@example.org or 202.661.8805