In December of 2017, Congress passed the Tax Cuts and Jobs Act and President Trump signed the package into law before the New Year. The sweeping legislation fully overhauled the U.S. tax code, including a reduction in the corporate rate and consolidation of deductions on the individual side.
In November, the House set the stage for a fight over the future of private-activity bonds. The House package fully repealed PABs and municipal advance refundings, but protected governmental municipal bonds.
The BDA, along with the Municipal Bonds for America (MBFA) Coalition, worked with champions in the Senate and with House leadership, to ensure their package maintained the tax-exemption for PABs and laid the groundwork for an opportunity to readdress advance refundings in the coming year.
Both governmental municipal bonds and private-activity bonds retained their tax-exempt status in the final package after a full-court press from the BDA “boots on the ground” grassroots effort. Through targeted op-eds on the Hill, hosting the Municipal Bonds “201” educational seminar and Capitol Hill fly-in, and leading a delegation of the MBFA Executive Committee to the White House, the MBFA Coalition made valuable inroads with the Administration, Congressional leaders, and staffers to preserve the tax-exempt status of municipal bonds and private activity bonds during the tax reform negotiations.
2018 brings new challenges for both private-activity bonds and municipal advance refundings. It is expected that Congress will turn its attention to a broad infrastructure package in the coming months. The BDA and the MBFA will continue to work with our partners in the issuer community to develop an alternative to a full repeal of advance refundings and with our partners on Capitol Hill to preserve PABs in the infrastructure bill.