Rep. French Hill, R-Ark., chair of the key House Financial Services Committee, and subcommittee leaders are urging the House Ways and Means Committee to preserve the municipal bond tax exemption as tax-writing work begins on reconciliation legislation.
The committee-to-committee letter marks an "incredible show of support to our market at a pivotal time," said Emily Brock, federal liaison for the Government Finance Officers Association.
The
The House Financial Services committee has jurisdiction over issues related to the economy, the banking system, housing, insurance, and securities and exchanges.
"We caution against any measures that could have unintended consequences on the municipal bond market for thousands of local governments and the constituents they serve," the lawmakers wrote.
Congress is expected to begin crafting language in the reconciliation bill over the next several weeks. The House Ways and Means Committee, where all tax legislation originates, has created separate tax teams to address various provisions of the expiring Tax Cuts and Jobs Act.
The municipal bond market has been on edge for months, worried that lawmakers would eliminate all or parts of the tax-exemption to help cover the cost of the tax package. The threat level amped up in late January when a
"Tax-exempt municipal bonds have a proven track record of responsible, community-driven investment," the letter said. "They are a fiscally sound tool that enables state and local governments to meet the growing needs of their communities without increasing federal spending or burdening local taxpayers. Therefore, we urge your support in preserving the federal tax-exemption for municipal bonds."
Hill, who coordinated all White House economic policy under former President George H.W. Bush, spent 30 years working in investments and banking prior to his congressional service. He was
"Chairman Hill's commitment to full preservation of the municipal bond tax exemption with his HFSC subcommittee chairs is a resounding letter to his peer, Chairman Smith, about his priorities in this tax debate," Brock said.
The American Securities Association also praised the letter.
"The ASA applauds Chairman Hill and the House Financial Services Committee for its leadership to protect the tax-exempt status of municipal bonds, a key lifeline for communities across the country to affordably modernize their communities for America's working families," said ASA President and CEO Chris Iacovella in a statement.
In addition to Hill, the letter was signed by Rep. Bill Huizenga, R-Mich., vice chairman of the Financial Services Committee; Rep. Ann Wagner, R-Mo., chair of the Subcommittee on Capital Markets; Rep. Mike Flood, R-Neb., chair of the Subcommittee on Housing and Insurance; Rep. Andy Barr, R-Ky., chair of the Subcommittee on Financial Institutions; Rep. Frank Lucas, R-Okla., chair of the Task Force on Monetary Policy, Treasury Market Resilience, and Economic Prosperity; and Rep. Daniel Meuser, R-Penn., chair of the Subcommittee on Oversight and Investigations.
