WASHINGTON — New York City Housing Development Corp. president Marc Jahr has been tapped as the chairman of the interim executive committee of Municipal Bonds for America, a coalition formed to stave off threats to tax exemption.
Jahr will chair an 11-member committee that will lead the group during its organizational efforts. A permanent executive committee is to be nominated and elected later this year.
The coalition is being formed under the auspices of Bond Dealers of America to provide a unified voice to defend the tax-exempt bond market against proposals to curb or eliminate tax exemption.
"To keep our competitive edge, we need to continue using the tax-exempt bond market to fund the infrastructure we depend on from coast to coast," Jahr said in a release. "Since 1913, tax-exempt municipal bonds have been put to work to improve the quality of life for Americans, providing a cost-effective and efficient way to fund capital improvements for schools, roads, highways, bridges, ports, hospitals, affordable housing, utilities, water treatment facilities and the like nationwide."
Other members of the interim executive committee include: Harry Black, director of finance for Baltimore; Joseph Costello, executive director of the Chicago Regional Transit Authority; Lars Etzkorn, program director for the National League of Cities; Marc Gerken, president of American Municipal Power in Ohio; and Kemp Lewis, managing director for municipal finance at Raymond James/Morgan Keegan.
Other members are: John Murphy, executive director of the National Association of Local Housing Finance Agencies; Toby Rittner, president and chief executive officer of the Council of Development Finance Agencies; Vince Sampson, president of the Education Finance Council; Russell Truell, chief financial officer of Franklin, Tenn. and Marty Vogtsberger, senior vice president and head of fixed-income capital markets at Fifth Third Securities.
"As we work to renew economic growth in America, it is critical that cities and states have access to the low cost and efficient capital they need to make our cities, states and nation more competitive," Black said in the release. "That will be especially important as cities and states up and down the East Coast rebuild in the aftermath of Hurricane Sandy.
The group plans to host a website that will post white papers, case studies and videos showcasing the importance of tax exemption.
Tax-exempt bonds could be hurt by either presidential candidate, according to market participants.
President Obama, in a jobs bill he floated in October 2011 and the budget he released for fiscal 2013 in February, proposed reducing to 28% the tax rate at which upper-income taxpayers can use the exclusion for tax-exempt bond interest, itemized deductions and other tax preferences.
The 28% limit would apply to married taxpayers filing a joint return with income adjusted for tax preferences of more than $250,000 (at 2009 levels) and single taxpayers with incomes of more than $200,000 (at 2009 levels). The cap would become effective for taxable years beginning after the end of this year, but would retroactively effect the long-standing muni bond holdings of many investors.
Romney has proposed lowering marginal tax rates across-the-board by 20% and eliminating the alternative minimum tax, all without increasing the federal deficit. He plans to close loopholes and eliminate certain tax preferences to pay for the reduced rates and elimination of AMT, but has not been specific. However, Glenn Hubbard, his senior economic adviser, has said the exclusion of tax-exempt interest from income taxes is "on the table" for reconsideration.
In addition, at least two commissions, one of which was established by President Obama, issued reports on how to reduce the federal deficit that recommended eliminating tax exemption for some or all new muni bonds.