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HomeMy WebLinkAboutMainting Tax-Exemot Status of Municipal Bonds LTR to Boxer, Feinstein, Capps 20130325G� t Y 0/, * �177 �� * cityof sAnluis oBispo n �l OFFICE OF THE CITY COUNCIL �/ g O� 990 Palm Street ■ San Luis Obispo, CA 93401-3249 ■ 805/781-7119 March 25, 2013 VIA FACSIMILE ONLY The Honorable Barbara Boxer, fax 202-228-3864 United States Senate The Honorable Dianne Feinstein, 202-228-3954 United States Senate The Honorable Lois Capps, fax 202-225-5632 United States House of Representatives Re: Maintaining the Tax -Exempt Status of Municipal Bonds Dear Senators Boxer and Feinstein and Representative Capps: As Congress moves forward with continued efforts to reduce the federal budget deficit and advance federal tax reform legislation, I am writing on behalf of the City of San Luis Obispo to urge your support for maintaining the federal tax exemption on municipal bond interest. The tax exemption has been a cornerstone of state and local infrastructure development for over 100 years, and is responsible for financing a majority of the nation's infrastructure. Eliminating or limiting the federal tax exemption on interest earned from municipal bonds is a particularly troublesome proposal on the table in the future federal tax reform discussions. Municipal bond interest is, and has always been, exempt from taxes. This distinction provides a significant benefit to investors, and allows cities access to investors they would not typically reach in the taxable bond market. If the bond interest exemption is either eliminated or capped, the costs for infrastructure financing for things like schools, roads, sewer systems, bridges and fire stations will increase. I want to stress the importance of keeping municipal bonds exempt from taxes. Please keep in mind the following: Tax exempt bonds fund local infrastructure that creates and supports jobs and competitive businesses nationwide. • It is imperative that Congress protect the ability of state and local governments to access cost-effective capital through the use of tax-exempt municipal bonds. city of san luis oBispo Re: Tax -Exempt Status of Municipal Bonds March 25, 2013 Page 2 While deficit reduction is important, it is also important that the federal budget is not balanced at the expense of local governments that are already struggling with their own budget challenges. The municipal tax exemption has a long history of success, and it continues to finance the majority of our nation's infrastructure needs for state and local governments of all sizes when no other source exists to do so. We cannot afford to abandon the great success of this important financing instrument, especially as state and local governments continue to economically recover. issue. Thank you for your attention to our concerns on this important economic development Sincerely, Jan Marx Mayor cc: City Council Katie Lichtig Jennifer Whiting, League of California Cities, iwhitingncacities.org T1Attorney\Legislation Support -Opposition Letters\2013 Letter\Tax Exempt Status of Muni Bonds.doex