Home\Latest News\President Trump and Congressional Leaders Release Tax Reform Proposal, Silent on Tax-Exempt Status of Municipal Bonds

President Trump and Congressional Leaders Release Tax Reform Proposal, Silent on Tax-Exempt Status of Municipal Bonds

Date: September 27, 2017

This week, the Trump Administration and Republican Congressional leaders released a proposed framework for comprehensive tax reform intended to guide congressional tax writing committees as they undertake to fill in specifics this Fall. The document does not indicate whether the current tax exemption for income earned on investments in municipal bonds is maintained.  The proposed framework lays out four key principles or goals that a final tax package would need to accomplish in order to win support from the Administration, including making the tax code simpler, fairer and easier to understand; providing middle-class tax relief; discouraging jobs from going overseas; and, repatriating trillions of corporate tax dollars to reinvest in the American economy. The framework does not include many specifics such as whether the proposals would add to the federal deficit, how much economic growth would result from these changes, or how repatriated tax income would be reinvested in the economy.

According to a study released earlier this year by the Association of Metropolitan Water Agencies and the National Association of Clean Water Agencies, municipalities issued nearly $38 billion in municipal bonds for investments in water and wastewater infrastructure in 2016. The WateReuse Association is urging Congress to maintain the tax-exempt status for income earned on investments in municipal bonds and members are encouraged to reach out to their Congressional delegation to voice their support for maintaining the exemption.

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