Members of the newly formed Municipal Bonds for America descended on Capitol Hill on Tuesday to protect the tax-exempt status of municipal bonds, as lawmakers have signaled muni bonds’ tax-exempt status may be threatened in fiscal cliff and tax reform negotiations.
“This is a very real possibility that near-term efforts to address the fiscal cliff could include a cap on the municipal bond tax-exemption, leading to higher borrowing costs for state and local governments nationwide,” Mike Nicholas, CEO of Bond Dealers of America and an organizer of the new Municipal Bonds for America coalition, told AdvisorOne in an email message. “This is not just a tax on wealthy investors, it’s a tax on everyone.”
A coalition of municipal market professionals representing dealers, issuers and local leaders launched Municipal Bonds for America on Oct. 10. The group is a national coalition committed to protect the tax-exempt status of municipal bonds.