Altering the current tax-exempt status of municipal bonds would reduce investment in infrastructure and pass higher financing costs along to the American public, an AMWA-backed advocacy coalition wrote to a congressional panel last week.
The comments were included in a statement submitted by Municipal Bonds for America for the record of a House subcommittee hearing on potential tax policy changes. AMWA is a supporting member of the coalition, which is organized to defend the existing tax-exempt status of municipal bonds. The association has worked with the group to educate lawmakers about the important benefits of tax-exempt municipal bonds in light of concerns that a future comprehensive tax reform bill could put these benefits in jeopardy.
“Taxing municipal bonds will do nothing to address the underlying issues causing our nation’s fiscal problems,” the group wrote, “but [would] shift federal costs onto state and local governments and, ultimately, the American public.”
“[I]t is absolutely certain that taxing municipal bonds, in whole or in part, will reduce the amount of infrastructure investments state and local residents can afford and be willing to undertake,” the letter continued.
Nearly three-dozen lawmakers delivered testimony at the hearing, including Rep. Randy Hultgren (R-Ill.), co-chair of the House Municipal Finance Caucus. Rep. Hultgren’s statement reiterated the importance of preserving the municipal tax exemption for financing infrastructure and community development.
Congress is not expected to consider a tax code overhaul until next year at the earliest, but some lawmakers have expressed plans to float their own ideas for tax reform legislation in the coming months.