The year 2017 promises, and threatens, to be a potentially momentous one for public finance in the United States. The Trump Administration and the 115th Congress may put in place tax reforms and infrastructure programs that will have transformative consequences for the financing of public projects in all sectors and at all levels. These are only a few of the issues that state and local officials and public finance professionals will be following closely in the coming year:
- Will income tax rates be reduced and, if so, will lower rates reduce the relative attractiveness of tax-exempt municipal bonds?
- Will new restrictions be placed on the purposes for which tax-exempt bonds may be issued or on the manner in which they may be sold, or how their proceeds may be invested?
- Will the new Administration pursue the trillion-dollar, ten-year infrastructure program that President Trump proposed during the campaign? Will Congress approve it? If so, which categories of infrastructure improvements will be given priority?
- How will any major infrastructure program be paid for? As a candidate, President Trump indicated that he would propose new tax credits as a funding method. If enacted, would those tax credits enhance or undermine traditional municipal bond financing?
- Will the Alternative Minimum Tax be eliminated and, if so, will that increase the relative attractiveness of “AMT Bonds” (e.g., exempt facility bonds) commonly issued to finance certain types of large infrastructure projects?
Squire Patton Boggs (US) LLP brings a unique combination of resources to these issues and national preeminence as both public policy and public finance experts. Since the election, our teams have been immersed in the effort to monitor and analyze the potential significance of the new Administration and Congress for business and public clients in every sector. Indeed, on November 10, 2016, we published a comprehensive post-election analysis (2016 Post-Election Analysis), sections of which addressed issues of importance to the public finance industry. Our plan is to communicate with our clients regularly and with increasing frequency as executive, legislative and regulatory agendas emerge in the coming months. We will be providing the best potential information and analysis our clients need to understand, affect and respond to developments in Washington.
With that introduction, please click through for our latest report, discussing the latest policy developments surrounding Congressional tax reform efforts, followed by a discussion of where key policymakers stand with regard to the tax exemption for interest on municipal bonds.