First, as previously reported, Speaker Ryan and House Ways and Means Committee Chairman Brady introduced the tax reform concept paper which pretty clearly put in jeopardy the existence of tax exempt bond. There's been some debate about whether the proposal explicitly repeals munis but the better thinking is that that's the clear implication. In any case, it's somewhat academic since nothing will happen with legislation this year, but it is a clear indication that if at least the House remains Republican next year this is the base substantive proposal that we will be facing.
Not coincidentally, in order to support this type of proposal the conservative think tank, The Tax Foundation, issued a report that recommends abolishing the muni interest exemption or at least reviewing it closely. If you peruse this report, it is the standard anti-tax exempt bond analysis. If you want to appreciate how ivory tower and wooly headed this kind of analysis is, consider that one of its principal arguments against municipal bonds is that they cause an “overinvestment” in infrastructure by state and local governments.
Hello out there, do any of you think that your state and local governments are overinvesting in infrastructure? If you happen to be in that idyllic state or locality in which the roads, mass transit, schools and hospitals are sufficient and in perfect working order then please come visit us here in the Washington area for a bumpy ride and almost daily Metro mishaps.
On a much better note, there is now Senate bank qualified (BQ) legislation, S. 3257, that is a companion to the bi-partisan House legislation HR 2229. S. 3257 was introduced by Sen. Menendez of New Jersey and Sen. Cardin of Maryland. Both are Democrats so there is an effort on to find at least one Republican cosponsor. This is a show- the- flag, keep- the- interest- up type legislation. It is good to maintain continuity of support for bank qualified.
Please let me know if you have any questions or comments. I am reaching out to specific states where we can use some help but obviously I'm glad to speak with any of you at any time.