NACo Report Provides Estimated Impact of Capping or Repealing Tax-Exempt Status of Municipal Bonds

A report released by NACo, Municipal Bonds Build America: A County Perspective on Changing the Tax-Exempt Status of Municipal Bond Interest, provides an analysis of the municipal bond market and the estimated impact of capping or repealing the tax-exempt status of municipal bond interest. The bullets below summarize the report findings.

  • Municipal bonds finance a range of locally selected infrastructure projects and have a long history of low default rates.
  • Any tax imposed on currently tax-exempt municipal bond interest will affect all Americans, as investors in municipal bonds and as taxpayers securing the payments of municipal bonds.
  • In 2012 alone, the debt service burden for counties would have risen by $9 billion if municipal bonds were taxable over the last 15 years and by about $3.2 billion in case of a 28 percent cap.

As previously reported on Conduit Street, MACo’s President, Wicomico County Executive Rick Pollitt, wrote a letter to Maryland’s Congressional Delegation asking for their support to keep municipal bonds tax exempt throughout Congress’s upcoming budget negotiations. In response to this letter, Congressman Dutch Ruppersberger of Maryland’s 2nd Congressional District has taken the lead on the tax-free municipal bond issue currently being debated in Congress.  Congressman Ruppersberger has written a “dear colleague” letter seeking the House leadership’s support on the issue.  The letter is jointly signed by Congressman Randy Hultgren (R – Ill).