Tax Reform and Tax-Exempt Municipal Bonds

Tax Reform and Tax-Exempt Municipal Bonds 2017-07-13T16:38:01+00:00

Tax-Exempt Municipal Bonds

Over the past several years, and with leadership being provided by our Second Vice President Columbia Mayor Steve Benjamin, we have built and led a strong coalition of almost 60 organizations united to stop either the elimination or capping of tax-exempt bonds. We have educated many leaders in Congress as to what bonds do to help build the infrastructure our people and businesses depend on every day. Our top officers also discussed this priority with President Trump one month after his election, at which time the President expressed his support for municipal bonds. We have made progress in getting our message out, but we remain under serious threat in the tax reform debate as members look for offsets to pay for bracket reductions. Here is the most recent coalition letter we have sent up on bonds.


State and Local Deductibility

A second issue, which is becoming very serious, is a proposal to either eliminate or cap the deductibility of state and local taxes. This is a fight we have not seriously faced since the tax reform act of 1986. But there are some estimates that this deduction costs the federal government over $1 trillion over 10 years, making it a serious target in tax reform. As we did in 1986, we are launching a campaign against “double taxation” to help the White House and Congress understand what is at stake in this fight. As part of the “Big 7” State and Local Coalition, which includes the Governors and State Legislatures and Cities and Counties, we have met with many of the experts who led the double taxation fight in 1986 to help us understand how the issue played out previously, and what strategy might work best with this Congress and Administration.

In April, the Big 7 sent our tax letter to all of Congress, letting them know we intend to fight hard to defend tax policies that are truly the historical bedrock of the federal, state and local partnership.

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Larry JonesAssistant Executive Director, Taxes and Budget