A bipartisan resolution introduced in the House of Representatives this month celebrates the 100th anniversary of tax exempt municipal bonds, at a time when some are discussing rolling back the exemption as part of a tax code overhaul.
Sponsored by Reps. Lee Terry (R-Neb.) and Richard Neal (D-Mass.), H. Res. 112 finds that municipal bonds “have helped build a strong economy and provide for the health and welfare of our citizenry,” and notes that “three-quarters of all infrastructure investments made in the United States are financed by municipal bonds.” The resolution goes on to recognize that the 100-year-old federal tax exemption for municipal bond interest “provides state and local governments timely access to cost-effective capital.”
The resolution comes as Democrats and Republicans on Capitol Hill are in the early stages of exploring a comprehensive tax code overhaul. Some lawmakers have suggested eliminating “loopholes” like the municipal bond interest exemption, but AMWA and other organizations have argued that such a move would only increase borrowing costs for communities across the country.
H. Res. 112 is a nonbinding resolution, so it would have no legal impact on the status of municipal bonds. But if the measure attracts wide-ranging support in Congress it could signal how many members are unwilling to put the tax exemption on the table as part of tax reform discussions.