85R12726 BPG-D
By: Turner H.C.R. No. 82
CONCURRENT RESOLUTION
WHEREAS, Interest on municipal bonds has been excluded from
taxation since the enactment of the federal income tax in 1913; and
WHEREAS, Municipal bond tax exemptions provide state and
local governments with a subsidy to finance crucial infrastructure
projects; because municipal bonds are tax-exempt, investors are
willing to accept lower interest payments, thus reducing borrowing
costs for governments; and
WHEREAS, Approximately 6 percent of all bonds issued each
year in the United States are municipal bonds, and in 2016, state
and local governments issued nearly $424 billion in tax-exempt
bonds, representing a six-year high and a 12 percent increase over
2015; governmental bonds typically fund schools, transportation
infrastructure, utilities, and other improvements, creating jobs
while improving the quality of life for area residents; and
WHEREAS, State and local governments make approximately 75
percent, the overwhelming majority, of our nation's infrastructure
investments, and many of those investments are financed with
municipal bonds; and
WHEREAS, The tax exemption for municipal bonds allows the
federal government to support infrastructure investment in a manner
that minimizes federal bureaucracy and maximizes community
decision making; and
WHEREAS, Over the years, the municipal bond market has
offered greater predictability than most, and it holds tremendous
appeal for individual investors, especially those of retirement
age; municipal bonds are owned disproportionately by households,
rather than by banks and other financial institutions, and a
Brookings Institution study found that the average age of municipal
bondholders was 62; and
WHEREAS, If the tax exemption for municipal bonds were to be
repealed, state and local governments would have to offer higher
returns to continue to attract investors, and taxpayers would pay
more for important infrastructure projects; increased debt service
costs would result in fewer such projects in an era in which the
safety and competitiveness of the nation's infrastructure gives
cause for tremendous concern; and
WHEREAS, For more than a century, the highly efficient
municipal bond market has helped to spur vital infrastructure
investment and associated job creation, and eliminating the federal
tax exemption would jeopardize these low-risk investment
opportunities; now, therefore, be it
RESOLVED, That the 85th Legislature of the State of Texas
hereby respectfully urge the United States Congress to retain the
tax exemption for municipal bonds; and, be it further
RESOLVED, That the Texas secretary of state forward official
copies of this resolution to the president of the United States, to
the president of the Senate and the speaker of the House of
Representatives of the United States Congress, and to all the
members of the Texas delegation to Congress with the request that
this resolution be entered in the Congressional Record as a
memorial to the Congress of the United States of America.