Lawmakers on both sides of the aisle are fighting to save tax-exempt bonds in the GOP tax bill that are used to finance infrastructure projects around the country.
In a bipartisan letter on Tuesday, more than 150 members of Congress called on House leadership to keep the deduction on tax-exempt municipal bonds, which are considered a critical tool for public-private partnerships and infrastructure rebuilding efforts.
Under the GOP tax bill, interest on newly issued private activity bonds would no longer be tax-exempt. Eliminating the program would save $38.9 billion, according to a summary sheet.
The bonds are issued for private projects and have been used to finance a wide range of infrastructure projects around the country, including roads, highways, housing, hospitals and airports.
“Municipal bonds are a lifeline to local communities looking to expand a hospital or repair their infrastructure,” said Rep. Randy Hultgren (R-Ill.), who led the letter with fellow Municipal Finance Caucus Co-Chairman Rep. Dutch Ruppersberger (D-Md.)
“We should preserve this Main Street financing tool for municipalities intimately connected to the needs of their communities,” they said.
It’s just the latest Republican criticism to emerge of the House GOP tax bill, which would reduce the corporate tax rate, among other provisions.
Ending the preferential tax treatment of private activity bonds has drawn the ire of transportation advocates, who say it would undermine President Trump’s infrastructure bill, which is supposed to rely on public-private partnerships.
Nearly two-thirds of core infrastructure investments in the United States are financed with municipal bonds, with $400 billion in municipal bond issued to finance projects in 2015 alone, according to Hultgren’s office.
House Transportation and Infrastructure Committee Chairman Bill Shuster (R-Pa.) did not sign on to the letter, but he agrees that it’s an important issue that needs to be re-examined.
“It’s been very beneficial in the transportation world,” Shuster told The Hill. “I want to see them stay.”