HomeMy WebLinkAboutMaintaining the Tax-Exempt Status of Municipal Bonds LTR to Boxer, Feinstein, Capps 20130614ty 0
Dot 0 city Of sAn luis oBi
,ina)c SPO
OFFICE OF THE CITY COUNCIL
990 Palm Street ■ San Luis Obispo, CA 93401-3249 ■ 805/781-7119
June 14, 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 tins omspo
Re: Tax -Exempt Status of Municipal Bonds
June 14, 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.
Thank you for your attention to our concerns on this important economic development
issue.
Sincerely,
Jan Marx
Mayor
cc: David Camp, House Ways and Means, Chairman fax 202-225-969
Sander Levin, House Ways and Means, Ranking Member fax 202-228-1033
City Council
Katie Lichtig
Jennifer Whiting, League of California Cities, jwhitinggcacities.org
David M llinax, League of California Cities
T:\Attorney\Legislation Support -Opposition Letters\2013 Letter\Tax Exempt Status of Muni Bonds.doex