As Trump Eyes Infrastructure, State and Local Leaders Defend Tax-Exempt ‘Muni Bonds’

Nationwide, the “muni bond” market has funded $1.65 trillion worth of projects for cities and other governments over the past decade. The borrowed money has paid for schools, roads, water and sewer systems, airports, bridges and other vital infrastructure. “These aren’t shiny baubles. These are essential infrastructure,” said Democratic Columbia Mayor Steve Benjamin, who is in his second term. “This is a sacrosanct part of our taxing policy that has been in existence since 1913.” But some Republicans on Capitol Hill want to end the tax-exempt status of muni bonds as part of broader changes to the federal tax code. That has many state and local officials worried. A city’s ability to borrow depends on investors’ willingness to lend it money by purchasing bonds. And the tax-exempt status of muni bonds is part of what makes them so attractive to investors, especially high-income taxpayers looking to reduce their tax bills.