Week in Insights: Ending Muni Bond Exemptions Would Harm Public

Eliminating the municipal bond interest tax exemption to offset federal tax cuts is a bad idea. Doing so would shift the tax burden from the federal level down to states and localities, forcing local governments to pass increased costs of borrowing onto residents.

Municipal bonds allow local governments to raise necessary capital for critical infrastructure and maintenance. Bond-financed projects include schools, roads, and city buildings. Municipalities sell bonds to investors in exchange for a guaranteed return on their investment. The prospect of tax-exempt interest attracts investors and convinces them to accept a lower interest rate than they otherwise would.

This ...