Tax

A panel of experts presented to the House Judiciary Committee Wednesday approaches that Congress could take with Internet sales tax legislation.

"One of these things does not belong" is a catchy slogan — and it comes to mind when looking at the latest tax policy ideas coming from Washington when looking at the municipal bond tax exemption. The exemption is not a result of the growth of a tax code designed to induce or reduce certain behaviors. Rather, it is the foundation for the flow of capital in a $3.7 trillion dollar market required to efficiently finance the nation's infrastructure.

State tax revenues are growing more slowly again, the Nelson A, Rockefeller Institute of Government said Tuesday in a report based on preliminary data for the fourth quarter of last year.

More than 1,000 small business owners from across the country are urging House Judiciary Committee Chairman Bob Goodlatte, R-Va. to act on the online sales tax issue.

The National League of Cities should concentrate on highlighting the importance of tax-exemption for municipal bonds, an official with the National Governors Association said Monday.

House Ways and Means Committee Chairman Dave Camp said Wednesday that he appreciates President Obama's desire to overhaul the corporate tax code, but nonetheless is critical of the president's fiscal 2015 budget.

President's Obama $3.9 trillion fiscal 2015 budget, released Tuesday, proposed capping the value of the tax exemption for municipal bond interest at 28%, which market participants complain would amount to an unprecedented tax on municipal bonds.

If the bond provisions in House Ways and Means Committee Chairman Dave Camp's tax reform proposal are implemented, the municipal market could become "bifurcated," experts say.

Rep. Dave Camp's proposed tax reform plan would eliminate or modify some of the federal tax code provisions in a way that would discourage nonbank corporations, banks, and property and casualty insurance companies from buying municipal bonds.

Long-time Muni Bond Experts Warn: Don’t dismiss Rep. Dave Camp's draft plan as a non-starter because it's going to be a foundation for tax reform and most of the bond proposals have been made and will continue to be made by lawmakers, administration officials, deficit reduction groups, and tax experts.

House Ways and Means Committee chairman Dave Camp's draft tax reform plan, released Wednesday, would terminate the tax exemption for private-activity bonds and advanced refunding bonds issued after 2014.

Columbia, S.C. Mayor Steve Benjamin, new chair of Municipal Bonds for America, talked about the importance of tax-exempt bonds Tuesday in a meeting between White House officials and members of the National Conference of Black Mayors.

House Ways and Means Committee Chairman Dave Camp plans to release a "comprehensive discussion draft" of tax reform next week, the Michigan Republican said in a note to republican members of his committee.

Tax-exempt interest from public purpose state and local government bonds was estimated to be the fourth largest corporate tax expenditure in fiscal year 2013, according to a Congressional Research Service report that used data from the Joint Committee on Taxation.

The Internal Revenue Service is auditing $51 million of general obligation bonds issued by Garfield School District, No. RE-2 in Colorado in 2006.

The House and Senate have passed legislation that extends the cuts to subsidy payments for Build America Bonds and other direct-pay bonds by an additional year.

Sen. Ron Wyden, the new chair of the Senate Finance Committee, has recently voiced some ideas that would favor the municipal bond market, such as extending bond-related and other expiring tax provisions and reinstating Build America Bonds. But the Oregon Democrat's past actions, such as sponsoring legislation that would favor tax-credit over tax-exempt bonds, have posed threats to the muni market.

Treasury Secretary Jack Lew warned Congress on Friday that the federal government will reach the debt limit by Feb. 27, having exhausted all of the extraordinary measures it can take – such as halting muni issuer purchases of state and local government series securities – to avoid it.

Sen. Ron Wyden, D-Ore., the incoming chairman of the Senate Finance Committee, said Friday that he is a very strong supporter of Build America Bonds to finance infrastructure projects.

A Treasury Department official said Wednesday that she recognizes the proposed issue price rules would be problematic for competitive bond deals and wants to know more about how they would cause problems for negotiated transactions.