Local government leaders warn that Congressman David Camp’s tax reform proposal to impose a 10 percent surtax on interest income from otherwise tax-exempt municipal bonds could have serious unintended consequences.

Clarence Anthony, executive director, National League of Cities, cautioned that the proposal “will reduce cities’ ability to promote construction jobs and build the foundations for future growth. Municipal and private activity bonds are used to build schools, roads, bridges, hospitals, and develop blighted areas of the community.

Tom Cochran, executive director, U.S. Conference of Mayors, noted that “municipal bonds finance three-quarters of the nation’s core infrastructure.  And a new federal tax on these bonds would make all local building much more expensive and much more difficult.” 

For more information about municipal bonds, see ICMA's 2014 Facts.