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Cities Urged to Communicate Support for Preservation of Municipal Bond Tax Exemption

May 21, 2013
Last week U.S. Rep. Eric Swalwell (D-CA) signed onto a House resolution celebrating the history of municipal bonds after being asked to do so by representatives of the National League of Cities’ (NLC) Asian Pacific American Municipal Officials and the Gay, Lesbian, Bisexual and Transgender Local Officials during their joint Capitol Hill lobby day.
The resolution celebrates the history of municipal bonds, the 100-year precedent of the federal tax exemption for municipal bond interest and the important contribution municipal bonds make to economic growth and well-being in each state and municipality. The resolution is seen as a barometer of support for traditional muni bonds by those on all sides of the issue.
NLC is mobilizing support to preserve the tax exempt status of municipal bonds and asks city officials to contact their representatives in the House to sign on as a co-sponsor of H. Res. 112. It is critical that cities demonstrate support for municipal bonds to help stop an effort to change the most important tool in the U.S. for financing investment in schools, roads, water and sewer systems, airports, bridges and other vital infrastructure as a part of a deficit reduction plan, a push for comprehensive tax reform, or as an offset for new spending.
Also last week, the Senate Finance Committee issued a white paper outlining federal tax reform options it may consider, including modifying or eliminating municipal bonds. While stating the ideas presented are not endorsed by Chair Max Baucus (D-MT) or ranking member Orrin Hatch (R-UT), they would significantly change existing law, and increase the cost for local taxpayers to fund public infrastructure, including highways, bridges, local streets, public transit, airports, water and sewer, general acute-care hospitals, primary and secondary schools, and jails.
Take Action
Cities are encouraged to send in letters urging Congress to keep the federal exemption for municipal bond interest. The League has a sample letter for cities to use online at www.cacities.org/federal.

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