Tax Exemption Faces Real Threat, Tax Panelists Agree

Tax-exempt bonds face a serious threat from tax reform or deficit reduction, experts agreed at a tax policy meeting held in Washington late last week. “I think that the state and local tax-exempt bonds are under attack,” John Buckley, former chief Democratic tax counsel for the House Ways and Means Committee, said at the meeting, which was sponsored by the Urban Institute and the Tax Policy Center and George Mason University. “There is no question about it.” Buckley cited two primary reasons why the elimination or restriction of tax exemption is attractive to some lawmakers: it is portrayed as a tax increase on upper income taxpayers and it would shrink local government. He was joined by four other tax experts who spoke on a panel titled “Fallout from Federal Tax Reform: Implications for State and Local Revenues.”

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