Yesterday, the Senate Finance Committee held a hearing on tax reform and its potential impact on state and local fiscal policy. This hearing is one in a series of hearings the Committee has conducted to examine various issues that are sure to be in the forefront of the tax reform debate. Witnesses at yesterday’s hearing were drawn from academia, government research organizations, and private sector think-tanks. No state and local government officials or broker/dealers were invited to testify.
Today’s issue of the Bond Buyer contains a story on comments of Committee Chairman Max Baucus (D-MT) questioning the effectiveness of the municipal tax-exemption and whether Congress should be looking for ways to replace tax-exempt bonds with other forms of financing.
BDA believes it is instructive to view Sen. Baucus’ comments in the context of the entire hearing, specifically:
• The primary focus of the hearing was devoted to discussion of state and local tax issues, primarily the taxation of interstate commerce and legislation to revise state and local telecommunications tax laws.
• During questioning, Sen. Maria Cantwell (D-WA) spoke passionately about the value of tax-exempt bonds and warned that any revisions to current law would force public power companies to find alternative rates, more expensive sources of capital which would ultimately lead to higher electricity and other fees for taxpayers in the Northwest.
For the full Bond Buyer story, click [here.]
