'Don't Mess with Our Bonds Coalition' Continues Fight for Muni Tax Exemption

Leaders of a coalition of more than 60 state and local groups and associations met with Reps. Randy Hultgreen, R-Ill. and Dutch Ruppersberger, D-Md., Tuesday to thank them for their continued support in preserving tax-exemption for municipal bonds.

The "Don't Mess with Our Bonds Coalition" has been urging Congress and the Obama administration to reject any proposal to hamstring the financing of local infrastructure projects by changing the tax-exempt status of municipal bond interest.

Hultgreen and Ruppersberger recently sent a joint letter to House Speaker John Boehner, R-Ohio., and House Minority Leader Nancy Pelosi, D-Calif., outlining the benefits of municipal bonds.

"Municipal bonds allow for real work to be accomplished in our communities," said Hultgreen during his meeting with the coalition. "It is hard to think of my community without the crucial projects that municipal bonds enable, or to think of how much worse our debt crisis would be if we are forced to raise taxes or dip further into the pot."

The U.S. Conference of Mayors and the National Association of County officials hosted Tuesday's meeting with the representatives.

"This is a program that is proven and we know how it works." said Ruppersberger, a former county executive. "Municipal bonds are a priority because they are good for America."

The coalition sent a three-page letter last week to Senate Majority Leader Harry Reid, D-Nev., urging him and his colleagues to contact Senate Finance Committee leaders and ask them to maintain the current status of tax-exempt municipal bonds as they work through comprehensive tax reform.

In that letter, the groups outlined the benefits of financing state and local projects with municipal bonds and sought to eliminate mischaracterized claims about muni investors.

They noted that beneficiaries of municipal bonds are state and local governments, the federal government, and taxpayers who depend on infrastructure for reliable transportation systems. Tax-exempt bonds do not just benefit the very wealthy, they said.

The groups argued that the tax exemption of municipal bonds interest "is so fundamental in part because it reinforces the basic compact of reciprocal tax immunity and respect that exists between the federal, state and local governments."

Any proposals to place limits or caps on tax exemption would "destroy this long-standing compact, and unravel over a century of synchronized and mutually beneficial federal, state and local tax policy," they wrote.

In February, the USCM, the National League of Cities and NACo held a joint roundtable discussion and issued a report highlighting the use of municipal bonds in more than 30 localities across the nation.

Sources have said that the muni bond community has become one of the top groups most heavily lobbying Congress, especially y tax-writing legislators, ahead of a tax code overhaul.

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