The Coalition to Save Tax-Exempt Bonds is committed to preserving the tax exemption on state and local bonds.

Tax-exempt bonds are issued to help virtually every community in America and have become a principal way for American local governments, school districts, and other entities to finance needed changes and additions.

With local government budgets under severe financial pressure, any efforts that threaten the tax exemption could have serious ramifications for local finances.

The Coalition is made up of local governments and local entities from across America—organizations of all types and sizes that have come together to stop this misguided raid on tax-exempt securities as a way to cut the Federal Government’s deficit.

The Coalition was created by local government entities in association with Van Scoyoc Associates Inc., Washington, D.C.’s foremost lobbying firm for local governments.

Please consider joining us to stop this movement to cut one of local government’s most vital financial lifelines. Keep checking this developing Website for more information about the ongoing fight.

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A Drumbeat of Attacks

On Sept. 12, President Obama sent Congress a proposal to limit the tax exemption for municipal bonds as part of his $447 billion jobs proposal.1 This is only the latest of a continuing drumbeat of proposals that endanger tax-exempt bonds. For instance:

• The President’s Fiscal Commission, also known as Simpson-Bowles, wanted to end the tax exemption for interest from all new bonds.
• The Bipartisan Tax Fairness and Simplification Act of 2011, introduced by U.S. Sens. Ron Wyden and Dan Coats, would change the exemption for interest on muni bonds to a tax credit.
• The Bipartisan Policy Center proposed a tax reform plan (Domenici-Rivlin) that would deny tax exemption for all new private-purpose bonds.
• The Congressional Budget Office’s report on revenue-raising options includes replacing the tax exemption with a direct subsidy for the issuer. Even the CBO acknowledges this change would raise borrowing costs for issuers.

All of these proposals could be on the table in the Super Committee’s deficit reduction deliberations going on now and in the future tax reform debate.

States, cities, counties, and others need to join together now to counter the gathering assault on tax-exempt bonds. While several associations of counties, cities, and other local government entities are sure to add their voices, this emergency cries out for an organization dedicated to this specific issue.

Economic Impact

Proposals to limit or end the tax exemption for state and local bonds would have a devastating impact on local government finances.

Any proposal to limit the tax exemption would reduce the demand for tax-exempt bonds and increase borrowing costs for all issuers.

What We Do

The Coalition is dedicated to saving the tax exemption for state and local bonds. To that end, the Coalition will work to:

• Keep Coalition members informed about all federal legislation affecting tax-exempt bonds.
• Mobilize Coalition members to fight proposals to restrict or end the tax exemption for state and local bonds.
• Educate Federal policymakers on the need to maintain the tax exemption for state and local bonds.

1 The President’s proposal would limit the benefit of itemized deductions and certain exclusions to 28 percent for single taxpayers with income over $200,000 a year and married couples with income over $250,000. The provision would go into effect on January 1, 2013, when the top two tax rates are scheduled to increase to 36 and 39.6 percent.

The proposal would limit the tax savings for taxpayers in these two top brackets for all itemized deductions, including the deduction for state and local taxes, and for a number of exclusions, including the tax exemption for interest income for state and local bonds.

While the President has proposed capping itemized deductions in the past, this is the first time he has proposed limiting the tax exemption for municipal bonds.