Obama’s slashing of municipal bond tax exemption means higher borrowing costs for Colorado schools and roads – and fewer jobs.
WASHINGTON – As President Obama visits Abraham Lincoln High School in Denver today, Crossroads Grassroots Policy Strategies (GPS) challenges the President to address one aspect of his tax increase plan which would cost Colorado public schools millions in increased borrowing costs and wipe out good-paying construction jobs.
The tax increase plan recently outlined by Obama would end the tax deductibility of state and local municipal bonds for large numbers of bond holders. These bonds fund road construction, school repairs and other community projects that create jobs. According to the Municipal Securities Rulemaking Board at least 2,254 municipal bonds are currently issued by Colorado municipalities. Another $5.9 billion in state debt is funded through tax exempt bonds.
According to Barrons, which monitors developments in the municipal bond markets:
“Under the jobs bill the President sent to Congress Monday, high-income individuals and families would no longer receive interest from state and municipal bonds free completely from federal income taxes, beginning in 2013. … All else being equal, the yield on muni bonds would have to rise to compensate for the lesser tax benefit, if the Obama jobs bill is enacted as proposed. … That could severe [sic] repercussions for the muni market.” (“Obama’s tax bill would hit munis,” Barrons, 9/13/2011)
“President Obama needs to explain why Coloradans should help pass a bill that will make it tougher for Colorado communities to repair schools and roads and create good-paying local jobs,” said Steven Law, president and CEO of Crossroads GPS. “Obama’s tax plan will drive up the cost of borrowing for struggling Colorado municipalities, leading to higher local taxes, shoddier schools and roads, and fewer construction jobs in Colorado. As Obama likes to say, this isn’t politics, it’s math.”
Crossroads GPS is a policy and grassroots advocacy organization that is committed to educating, equipping and mobilizing millions of American citizens to take action on the critical economic and legislative issues that will shape our nation’s future in the years ahead.
For more information, contact Jonathan Collegio at [email protected] or (202) 559-6424.
