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