Overview
The Bond Buyer quoted Micah Green in a September 29 article titled “Muni Experts Worry About Donald Trump’s Tax Plan.” The article discusses the tax reform proposal from Republican presidential candidate Donald Trump that grabbed the attention of municipal market participants claiming it would lower tax rates and reduce or eliminate tax deductions and loopholes for the rich. According to the article, while it’s unclear how the municipal bond tax exemption would be treated under Trump’s plan, some experts warn the industry needs to watch it carefully and ask questions.
Mr. Green, who co-chairs Steptoe’s Government Affairs & Public Policy Group, says that anyone who cares about munis should look for more details about curbing tax preferences, particularly income exclusions and their value. The muni tax exemption is technically an exclusion of muni interest from income.
Trump's plan "sounds a lot like the 28% cap" that has been proposed by President Obama but could even be "more severe," Mr. Green tells The Bond Buyer. The plan seems to focus on limiting the value of tax preferences more quickly than under current law, and if the muni exemption is affected, the after-tax yield of munis and state and local governments' borrowing costs could also be affected. Trump's plan calls for "starting by steepening the curve of the personal exemption phaseout and Pease Limitation on itemized deductions," he adds.
The full article can be read at The Bond Buyer (subscription required).
