Utah State Treasurer David Damschen has signed a letter with more than 600 state and local officials asking Congress not to change tax treatment of municipal bonds.
He recently returned from a trip to Washington, D.C., to attend the National Association of State Treasurers’ (NAST) 2016 Legislative Conference. While there, a letter was submitted, co-signed by Damschen and over 600 state and local officials, to top lawmakers on tax-law writing committees in the U.S. Congress, including Utah Sen. Orrin Hatch. The letter outlines the group’s adamant opposition to proposed changes to the tax treatment of municipal bonds, noting the current structure is essential for obtaining low-cost investor funding for the building of schools, roads and other infrastructure.
“If Washington politicians eliminate a major incentive for investment in Utah infrastructure bonds, building our schools, roads and transit projects will become much more expensive for the Utah taxpayer,” said Damschen. “Municipal bonds have been exempted from federal taxation since the establishment of the federal income tax system – and we’re fighting to ensure they stay that way.”
As outlined in the letter, “Proposals to change this commitment to tax-free municipal bonds would not only be costly for state and local taxpayers, but also result in fewer projects, fewer jobs and further deterioration of our infrastructure.” Eliminating or capping the exemption would harm taxpayers throughout the nation because “municipalities will have to either curtail infrastructure projects or raise taxes on sales property or income.”
Tax-exempt municipal bonds are the primary financing mechanism for state and local infrastructure projects and provide essential funding for states, counties and localities. Three-quarters of all U.S. public infrastructure projects in the 21st century have been built by states and local governments utilizing the public-private partnership embodied in tax-exempt municipal bonds.
“There are proposals in D.C. to effectively increase the costs of building roads and schools in Utah on the backs of taxpayers – so we went to Washington to ensure our voice of opposition is heard,” said Damschen.
See related Wall Street Journal story.