Exemption of Interest on Municipal Bonds Was One of 12 Deductions and Exclusions Considered Essential to the Function of the Nation in Original Federal Tax Code
WASHINGTON, July 23, 2013 /PRNewswire-USNewswire/ -- Municipal Bonds for America (MBFA) coalition leaders today sent a letter to Members of the United States Senate urging them to "preserve the federal tax exemption for municipal bonds."
The MBFA letter highlighted the importance of the federal/state partnership that was considered an important principle of the original tax code, "As you consider your options in tax reform, we are writing to remind you that Congress officially recognized the importance of the federal/state partnership on October 3, 1913. On that date, Congress codified the exemption of interest on municipal bonds as part of the enactment of the original federal tax code."
"The principle of reciprocal immunity – the federal government doesn't tax state and local governments, and vice versa – was considered imperative to the original tax code. It is a principle that should be preserved and protected now, and for the next 100 years."
This original tax code was just 27 pages in length, and contained only twelve personal deductions and exclusions considered essential to the function of the nation, including the exemption of interest on municipal bonds.
The MBFA letter is being sent before a July 26th deadline for Members of the U.S. Senate to present detailed proposals on which tax breaks should remain in a rewritten tax code. Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Member Orrin Hatch (R-Utah) instituted the July 26th deadline in a June 27 letter that asked Senators to 'formally submit legislative language or detailed proposal for what tax expenditures meet these tests and should be included in a reformed tax code, as well as other provisions that should be added, repealed or reformed as part of tax reform."
MBFA members will be visiting Senate offices to meet with Members and their staffs throughout the week. MBFA members will be dropping off copies of the MBFA letter sent today along with copies of the original 1913 federal tax code.
MBFA Executive Committee members signing today's letter include Columbia, S.C. Mayor Steve Benjamin, Baltimore, MD Director of Finance Harry Black, and Franklin, TN Chief Financial Officer Russell Truell.
The letter was also signed by MBFA Executive Committee Members representing the following organizations: Council of Development Finance Agencies, Education Finance Council, Salt River Project, American Municipal Power, Inc., International Economic Development Council, National Association of Local Housing Finance Agencies, National League of Cities, New York City Housing Development Corporation, Raymond James, Fifth Third Securities, and the Regional Transportation Authority – Chicago.
About Municipal Bonds for America
MBFA is a rapidly expanding coalition of organizations and individuals interested in the preservation of tax-exempt bonds. The coalition is educating the Administration and Congress on the municipal market and advocating for sensible rules for municipal bonds. To learn more or to become involved in MBFA activities, please visit the coalition's website at www.munibondsforamerica.org.
SOURCE Municipal Bonds for America