The GOP Rethinks Debt and Taxes
The GOP tax proposal cuts corporate taxes and eliminates key individual deductions. But we’re a long way from a final bill.
Excerpt below of John Mousseau’s comments to Barron’s. A subscription is required to read the full article.
Finally, the tax bill would curb borrowing in the municipal-bond market. While the exemption on interest on most types of muni bonds would be retained, so-called private-purpose bonds would lose that privilege.
In particular, bonds to finance sports stadiums no longer would qualify for tax-exempt bond financing, This will mean billionaire owners of sports teams would have to build their stadia with private, taxable money, and that “should keep municipalities from being on the hook for bad stadium deals,” according to John R. Mousseau, director of fixed income at Cumberland Advisors.
Tax-exempt financing for nonprofit hospitals and private universities also would be ended, along with “advance refunding” bonds. The latter provision would hurt municipalities. They’ve saved billions of dollars by reducing borrowing costs with these financings, Mousseau notes. He thinks this provision will be killed, given that it hits municipalities while they cope with pension expenses. On the other hand, Washington needs the bucks to keep the tax bill’s cost under $1.5 trillion, while providing cuts to corporations.
Visit http://www.barrons.com/articles/the-gop-rethinks-debt-and-taxes-1509759402 to read the larger article and more of John Mousseau‘s comments to Barron’s.
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