Mnuchin Sees Tax Reform by August as Groups Press for Muni Tax Exemption

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WASHINGTON – Treasury Secretary Steven Mnuchin said Thursday that the Trump administration wants to have tax reform done by Congress' August recess, as nearly 400 groups across the nation are urging House and Senate leaders to preserve the current tax exemption for municipal bonds.

In an interview with CNBC Thursday morning, Mnuchin said that growth is the number one issue on the administration's economic agenda and that tax reform is the key to economic growth.

"We are committed to pass tax reform. It will be very significant," he said. "We want to get this done by the August recess. We've been working closely with the leadership in the House and the Senate and we're working on a combined plan."

Mnuchin said the comprehensive tax reform plan will be focused on "middle income tax cuts, simplification, and making the business tax competitive with the rest of the world."

The Treasury secretary's remarks come as the House Budget Committee has scheduled a "Members' Day" hearing for Thursday, March 2 to discuss their suggestions for the fiscal year 2018 budget.

House and Senate Republicans want to pass tax reform, as well as the repeal and replacement of the Affordable Care Act through the reconciliation process, with legislation that would take only 51 votes in the Senate rather than the normal 60 needed to limit debate, and therefore avoid a filibuster. The budget resolution for fiscal 2017 contains ACA provisions, but tax reform would have to be done through the fiscal 2018 one. President Trump is expected to propose his fiscal 2018 budget in March.

Meanwhile, 375 groups from across the nation representing almost every state have sent identical letters to leaders of the House and Senate and tax-writing committees that urge them to preserve the tax-exempt status for municipal bonds.

"For almost 100 years, state and local governments have financed infrastructure and community improvement projects using tax-exempt municipal bonds," the group said. "Infrastructure financed by municipal bonds makes possible nearly every aspect of daily life and is a critical component in building and maintaining a strong economy for every citizen and company in this country."

Munis "are the backbone of state and local government finance and key components in a vibrant federal economy," they told the lawmakers.

A reduction or elimination of the tax exemption for municipal bonds "could raise infrastructure costs by 10% to 12%, with these increased costs being passed directly to taxpayers in your state," the groups wrote. "Ensuring that issuers can continue to fund capital projects by effective means will ultimately reduce the burden on every taxpayer and all levels of government."

The groups include not only national groups such as the Municipal Bonds for America coalition, Bond Dealers of America, the Securities Industry and Financial Markets Association's Asset Management Group, and the National League of Cities, but also cities, utility districts and airport groups and authorities.

They include investment companies such as PIMCO and Eaton Vance Management and broker dealers, including Stephens, Inc. and Bernardi Securities, Inc.

The letters will remain open on the MBFA coalition's website for additional signatures and will be updated with them in the future, said Justin Underwood, BDA's federal policy advisor.

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