Reps. Randy Hultgren (R-Ill.) and Dutch Ruppersberger (D-Md.) are circulating a "Dear Colleague" letter in support of tax-exempt municipal bonds. The letter urges Speaker of the House John Boehner and Democratic Leader Nancy Pelosi to support municipal bonds and oppose proposals that would cap or eliminate the deduction for municipal bond interest.
As tax reform discussions resume in the 114th Congress, proposals that would cap certain tax benefits, including the exemption for municipal bond interest, continue to be considered as a way to help address the federal debt and deficit. In the president's FY 2016 Budget Proposal, the administration reiterated its proposed 28 percent cap on the value of certain tax benefits, including interest earned on new and outstanding state and local tax exempt bonds. Last year’s comprehensive tax reform legislation offered by former House Ways and Means Chairman Dave Camp (R-Mich.) H.R. 1, the “Tax Reform Act of 2014,” would have placed a 10 percent “surtax” on tax-exempt interest for high income taxpayers based on their modified adjusted gross income ($400,000 for single filers, $450,000 for married filers).
Tax-exempt municipal bonds have been a fundamental feature of the United States tax code since 1913. They remain the primary method used by state and local governments to finance public capital improvements and public infrastructure projects that are essential to creating jobs, sustaining economic growth and improving the quality of life for Americans in every corner of this country. Between 2003 and 2012, counties, states and other localities invested $3.2 trillion in infrastructure through long-term tax-exempt municipal bonds – 2.5 times more than the federal investment. AGC continues to vigorously support efforts that preserve the tax-exempt status of municipal bonds as the cornerstone of infrastructure finance that they are.
For more information, please contact Scott Berry at berrys@agc.org or (703) 837-5321.