Looming Federal Tax Reform Creates Uncertainty for Counties

It remains unclear how municipal bonds would be treated in the legislative version of the House plan. 

US House of Representative’s Speaker Paul Ryan released a blueprint of tax reform this summer, with plans for legislation in the coming year. As described by Reuters,

Republicans in the U.S. House of Representatives said on Friday [June 24] they would advance legislation next year to chop individual and corporate U.S. tax rates.

The blueprint released this summer did not include legislative text, leaving specifics on several topics affecting county governments, including the tax exemption on municipal bonds, difficult to determine.

As the House Ways and Means Committee and House leadership continue to look at comprehensive tax reform, MACo and county associations across the country advocate for protection of the municipal bond tax exemption.

In the fall of 2015, MACo reached out to the Maryland Congressional Delegation on the topic of municipal bonds. MACo’s letter stated,

Tax-exempt municipal bonds are the most important tool in the United States for financing state and local infrastructure. Municipal bond financing supports schools, hospitals, water, sewer facilities, public power utilities, roads and mass transit. From 2003-2012, Maryland state and local governments used $19.2 billion in municipal bonds for infrastructure investment. . . As you represent Maryland in the federal fiscal debates, we ask that you join with MACo . . . and help defend the tax-exempt status of municipal bonds.

Read MACo’s full letter here.

For more information, see our previous posts, MACo Asks Maryland’s Congressional Delegation to Protect Municipal Bonds and MACo, State Treasurers Ask Congress to Protect Municipal Bonds.