This spring Reps. Dutch Ruppersberger and Randy Hultgren co-founded the Municipal Finance Caucus of the U.S. House of Representatives. Created to fight for the right of state and local governments to independently finance the projects they need to keep their communities strong, the Municipal Finance Caucus is also focused on maintaining the current federal tax exemption for municipal bonds.
As a former county councilman and county executive, Mr. Ruppersberger understands that each city, town and county is different and that the U.S. Congress should be working to increase flexibility for state and local governments, not limit it. He also understands that demand for state and local investment in infrastructure is only going to grow, in part to maintain current systems and to meet future needs.
Municipal bonds have been used for centuries to build, upgrade and repair schools, roads, bridges, water systems, utilities and other critical infrastructure. In fact, nearly two-thirds of our nation's core infrastructure is financed with municipal bonds.
The strength and flexibility of municipal bonds are due in part to the fact that state and local governments issue municipal bonds with the consent of their communities and largely without interference from the federal government. Municipal bonds have been exempt from federal tax — just as federal bonds are exempt from state and local tax — since the federal income tax was created more than a century ago.
From time to time, federal lawmakers have considered raising federal revenues with an unprecedented tax on municipal bonds. These misguided proposals have always failed, largely because there is no better alternative that could provide accessible, cost-effective financing for state and local governments.
For all these reasons, the Municipal Bonds for America Coalition — a non-partisan group of stakeholders representing those who issue, sell and own municipal bonds — applauds the creation of the Municipal Finance Caucus and stands ready to help the congressmen as they work to educate other members of Congress and the public on the important issues facing municipal finance and the importance of municipal bonds.
Stephen K. Benjamin
The writer is mayor of Columbia, S.C., and chairman of the Municipal Bonds for America Coalition.