President Obama’s fiscal year 2014 budget again proposed a 28% cap on municipal bond interest and other tax expenditures for the top 2% of families, despite strong efforts by muni market participants to lobby against it.
The municipal bond market was dealt a harsh blow. On Wednesday, President Obama released his fiscal 2014 budget proposal. It had about $800 billion in new taxes over the next 10 years, says TheStreet’s Joe Deaux. The plan also includes measures to place a 28% cap on the amount of interest bond investors can deduct from their taxable incomes.
DuPage County, Ill., has a rich history of financial stability that has helped us stay afloat during these turbulent economic times. We’ve cut the budget by more than $13 million over the past two years, trimmed costly employee benefits, and reformed several independent taxing bodies in an effort to yield greater savings for our taxpayers.
Although we can’t know the exact details of what will be include in the President’s Budget at this time, many believe it will not change in a significant way from what has been proposed in the past. This means there is a good possibility for the plan to include a limit on the value of itemized deductions and other income-tax breaks at 28% for higher income households.
The number and scope of investment projects will decrease for state and local governments if a federal limit is placed on tax-exemption for municipal bonds, the National League of Cities warned in a survey released Thursday.
Fourteen Democrats in the Senate are strongly urging President Obama not to cap or eliminate tax exemption for municipal bonds, warding it would have a negative impact on both federal and local budgets and ultimately be “inappropriate and shortsighted.”
Reps. Richard Neal, D-Mass., and Lee Terry, R-Neb., both former public officials, have introduced a resolution on the importance of municipal bonds to state and local governments that they hope will garner a lot of attention and support among House members.
The tax exemption on municipal bond interest will not survive tax reform efforts in Washington, D.C., without a grass-roots effort from issuers, according to market experts at the fifth National Municipal Bond Summit.
This year marks the 100th anniversary of the passage of the Federal Income Tax, and the exemption against taxing income from municipal bond investments. This month also marks the 25th anniversary of the creation of the Anthony Commission On Public Finance. Why should you care?
It’s no secret that state and local governments are at very fragile financial crossroads in trying to finance capital projects on the heels of the recession. Measures that increase local borrowing costs will likely be frowned upon by the financial markets.
The Municipal Bonds for America coalition warned Friday that a retroactively applied 28% cap on the value of tax exemption would fundamentally alter 100 years of precedent, raise borrowing costs for issuers, limit infrastructure development and constrain economic development, while doing little to help solve the nation’s fiscal crisis.
Your organization can help Municipal Bonds for America’s efforts to support the municipal bonds industry. Contact us today.
385 Organizations Sign Letter to Save the Muni-Exemption
On February 21, 2017, the Municipal Bonds for America (MBFA) Coalition sent a new letter to the House and Senate Leaders, including House Ways and Means and Senate Finance Committee leaders, urging them to retain the current law status on municipal bonds as a part of their ongoing debate on comprehensive tax reform. The letter is signed by 385 organizations from across the United States, representing almost all 50 states.
Letter to the HouseLetter to the Senate