On the recordMay 17, 2011
I rise today to introduce the Municipal Bond Market Support Act of 2011. This bill is similar to ones that Senator Crapo and I introduced in the 110th and 111th Congresses. I am grateful for Senator Crapo's continued leadership on this issue, as well as the cosponsorship of our Finance Committee colleagues, Senators Kerry, Snowe, Cardin, and Grassley. Municipal bonds have long played an essential role in financing the construction, expansion, and repair of schools; highways, roads, and bridges; affordable housing; hospitals; public transit; water and sewage systems; and community-owned utilities. Since the enactment of the Federal income tax in 1913, Congress has supported the municipal bond market by exempting municipal bond interest from taxation. Tax exemption confers Federal assistance on State and local capital investments; it also recognizes that decisions about which projects to fund are most appropriately made at the State or local level. Historically, banks were significant purchasers of tax-exempt debt. But the Tax Reform Act of 1986 severely curtailed banks' participation by automatically disallowing deductions for interest expense whenever municipal bonds are purchased. The 1986 Act left an exception only for bonds purchased from smaller municipalities, those selling no more than $10 million of bonds each year.…
