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Letter to the Hon. Kevin Brady and to the Hon. Richard Neal, Chairman and Ranking Member of the House Committee on Ways and Means - Supporting the Tax-Exempt-Municipal Bond

Letter

By: John Kennedy, Mark Pocan, Denny Heck, Pramila Jayapal, Derek Kilmer, Dan Newhouse, Rick Larsen, Barbara Comstock, Rob Wittman, Mia Love, Rob Bishop, Lamar Smith, Beto O'Rourke, Vicente Gonzalez, John Culberson, Joe Wilson, Sr., Lou Barletta, Brian Fitzpatrick, Ryan Costello, Bob Brady, Peter DeFazio, Earl Blumenauer, Suzanne Bonamici, Tom Cole, Steve Stivers, Dave Joyce, Tim Ryan, Marcy Kaptur, Bob Gibbs, Bill Johnson, Bob Latta, Claudia Tenney, Paul Tonko, Sean Maloney, Nita Lowey, Grace Meng, Kathleen Rice, Pete King, Lee Zeldin, Ruben Kihuen, Jacky Rosen, Mark Amodei, Dina Titus, Steve Pearce, Michelle Lujan Grisham, Donald Bacon, Kevin Cramer, Alma Adams, Robert Pittenger, Richard Hudson, Jr., David Rouzer, Mark Walker, David Price, Lacy Clay, Jr., Rick Nolan, Collin Peterson, Debbie Dingell, Dave Trott, Bruce Poliquin, Jamie Raskin, Anthony Brown, Dutch Ruppersberger, Bill Keating, Mike Capuano, Jim McGovern, Andy Barr, John Yarmuth, Kevin Yoder, Luke Messer, Jim Banks, Cheri Bustos, Rodney Davis, Jan Schakowsky, Raja Krishnamoorthi, Luis Gutiérrez, Dan Lipinski, Robin Kelly, Mike Simpson, Steve King, David Young, Dave Loebsack, David Scott, Austin Scott, Rob Woodall, Mario Diaz-Balart, Frederica Wilson, Debbie Wasserman Schultz, Ted Deutch, Lois Frankel, Alcee Hastings, Sr., Brian Mast, Tom Rooney, Dennis Ross, Kathy Castor, Charlie Crist, Jr., Gus Bilirakis, Darren Soto, Bill Posey, Stephanie Murphy, Al Lawson, Jr., John Rutherford, Ted Yoho, Eleanor Norton, Michael Coffman, Scott Tipton, Juan Vargas, Alan Lowenthal, Maxine Waters, Mark Takano, Raul Ruiz, Ted Lieu, Grace Napolitano, Brad Sherman, Tony Cárdenas, Adam Schiff, Julia Brownley, Salud Carbajal, David Valadao, Zoe Lofgren, Anna Eshoo, Ro Khanna, Jim Costa, Eric Swalwell, Jackie Speier, Barbara Lee, Mark DeSaulnier, Ami Bera, Mike Thompson, John Garamendi, Jared Huffman, Doug LaMalfa, Kyrsten Sinema, Ruben Gallego, Paul Gosar, Raul Grijalva, Tom O'Halleran, Steve Womack, Terri Sewell, Mo Brooks, Bradley Byrne, Randy Hultgren
Date: March 9, 2017
Location: Washington, DC
Issues: Taxes

Dear Chairman Brady and Ranking Member Neal:

As Congress considers tax reform and infrastructure financing, we, the undersigned, write to express our strong support for an already potent tool already in hand -- the tax-exempt municipal bond. For more than a century, states and local governments have depended on this reliable and efficient means of financing.

Nearly two-thirds of core infrastructure investments in the United States are financed with municipal bonds. In 2015 alone, more than $400 billion in municipal bonds were issued to finance the projects that touch the daily lives of every American citizen and business. They are the roads we drive on, schools for our children, affordable family housing, water systems that supply safe drinking water, courthouses, hospitals and clinics to treat the sick, airports and ports that help move products domestically and overseas, and, in some cases, the utility plants that power our homes, businesses, and factories. These are the pro-growth investments which spur job creation, help our economies grow, and strengthen our communities.

A combination of local control and local responsibility makes municipal bonds an incredibly effective and efficient tool. Voters throughout the country overwhelmingly support tax-exempt municipal bonds, which are either approved by locally-elected officials or directly through bond referenda -- fiscal federalism at its finest. This must help explain why the default rate is less than 0.01%. Federal tax exemption reduces the cost of issuing municipal bonds, but it is these voters who will pay the interest and principle on this debt. As a result, over the last decade overall state and local borrowing has actually declined in proportion to the economy, while still financing more than $2 trillion in new infrastructure investments. And, if simply left alone, municipal bonds likely will finance another $3 trillion in new infrastructure investments by 2026.

Furthermore, millions of Americans depend on municipal bonds for their economic security, and invest in them because of their low-risk nature. Nearly three-quarters of individual investors earn less than $200,000 per year and more than three-quarters are 55 or older. Businesses also rely on municipal bonds as a safe, stable, long-term investment.

In conclusion, changes to the tax-code should recognize the vital role of tax-exempt municipal bonds. Any changes under consideration to the tax exempt status that would increase the cost of financing for states and local government should be provided very careful consideration. We believe the current tax-exempt status contributes to efficient economic growth that benefits all Americans.


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