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NACo > Legislation & Policy > Washington Watch > Posts > ​Legislative Update: Tax Reform and Municipal Bonds
August 02
​Legislative Update: Tax Reform and Municipal Bonds
On July 30, Reps. Dutch Ruppersberger (D-Md.) and Randy Hultgren (R-Ill.) met with NACo and other members of the broad coalition working to preserve the current tax exemption for municipal bond interest. NACo Executive Director Matt Chase thanked the Congressmen for their leadership on the House “Dear Colleague” letter on municipal bonds and was joined by the Executive Director of the U.S. Conference of Mayors, Tom Cochran, to lead a discussion on the next steps in this ongoing effort. The Congressmen are considering either re-opening the letter for additional signatures or starting a new letter.

 

If you have not, please remember to thank your House members for signing the “Dear Colleague” letter in support of the exemption for municipal bond interest.  To see if your Representative signed on, click here

 

In a bit of breaking news, House Ways and Means Committee Chairman Dave Camp (R-Mich.) plans to move forward on a tax reform bill before a potential showdown over raising the debt limit in November.  The Chairman is reportedly expected to release his overall principles for tax reform after Labor Day and intends on having draft legislation ready for markup in October.

 

In the Senate, earlier this month, Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Member Orrin Hatch (R-Utah) engaged in a “blank slate” exercise as the next step in tax reform efforts in the Senate. This approach essentially removed all provisions in the tax code, including the exemption for municipal bond interest, and called for Senators to make the case for specific provisions to be included in the code. 

 

In the letter sent out to their colleagues, the two leaders stressed the need to simplify the tax code, but recognized that some provisions were important to keep.  For those that should be retained, they called for clear evidence that the provision helps to either grow the economy, to make the tax code fairer, or to effectively promote other important policy objectives.

 

The exercise generally received mixed reactions from Senators, ranging from no response submitted to responses with just general principles outlined. For a copy of the letter NACo sent to the Senators urging them to support the tax exemption for municipal bond interest and the current deductions for state and local taxes, click here. NACo also joined other state and local government associations in a letter to the Senate. To view a copy, click here. Finally, NACo also worked with the U.S. Conference of Mayors and National League of Cities to organize a broad coalition letter to Senators. For a copy of that letter, click here.

 

Congress is currently scheduled to leave for the August recess beginning August 5 through September. As members travel home, the recess will provide a prime opportunity to reach out and schedule appointments and project tours with members and their staff to talk about the crucial importance of municipal bonds to your local communities.

 

NACo urges counties not to just tell members about the importance of tax-exempt municipal bonds, but to show them! Taking members and their staff on tours of facilities or projects funded completely or in part by municipal bonds is one of the best ways to communicate their importance. These meetings are particularly important if your Member of Congress serves on Senate Finance or House Ways and Means.

 

If you want to show the Members of Congress the impact of changes to the tax-exempt status of municipal bonds in your county and your state, please feel free to utilize the various resources NACo has developed on municipal bonds found here. In particular, please note that NACo has prepared individualized profiles with the cost estimates for each state and 45 counties that you can find here and here. If your county is not among the initially surveyed 45 counties, and you would like to have your county cost profiled, please contact NACo’s research team at research@naco.org and provide your 2012 interest payment on your tax-exempt municipal bonds.

 

While speaking with House members over the recess, counties should also urge them to co-sponsor the Terry/Neal resolution (H. Res. 112) supporting municipal bonds. H. Res. 112, introduced by Reps. Lee Terry (R-Neb.) and Richard Neal (D-Mass.), celebrates the history and importance of municipal bonds and the role they have played in developing the infrastructure of our nation. Click here to see the current list of co-sponsors.

 

If your Members would like to sign on to the Terry/Neal resolution, have their staff contact either A.T. Johnston in Rep. Terry’s office (at.johnston@mail.house.gov or 202.225.4155)or Ann Jablon in Rep. Neal’s office (ann.jablon@mail.house.gov or 202.225.5601).

 

For additional questions on how to engage your members over the August recess, please contact the NACo Legislative Affairs Department at 202.942.4254. Remember to also invite the Member’s Washington, D.C. staff including their legislative director and chief of staff!

 

Contact: Mike Belarmino mbelarmino@naco.org 202.942.4254 

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