House Ways and Means Committee Chairman David Camp (R-Mich.) this week is expected to release his plan to overhaul the federal tax code, following months of behind-the-scenes work on the legislation.
Few specifics have leaked out about the plan, although observers generally expect the proposal to lower both corporate and personal income tax rates, while remaining revenue-neutral overall. To achieve this, Camp will likely propose reducing or eliminating a number of existing tax breaks.
AMWA, along with other water utility and municipal organizations, will be watching closely to see how Camp’s bill treats the existing tax exemption for interest earned on municipal bonds. President Obama has previously called on Congress to scale back the muni bond exemption, but AMWA and others have warned that such a move would increase financing costs for communities faced with upgrading their water infrastructure. In a report released last year, for example, AMWA and the National Association of Clean Water Agencies (NACWA) found that communities across the U.S. would have paid an additional $9 billion in debt service costs related to water infrastructure investments in 2012 if municipal bond interest was fully taxed.
Regardless of the contents of Camp’s plan, it is likely to face a tough path through Congress with the 2014 midterm elections looming.