Ct. Urges Retention of Municipal Bond Tax Treatment

April 12, 2013 ( - Connecticut State Treasurer Denise L. Nappier is urging Congress to keep intact the federal tax exemption on municipal bonds.

By Rebecca Moore | April 12, 2013
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In a letter to Congressional leaders, Nappier wrote: “[W]e write to express our views regarding recent proposals that state and local bonds should no longer be treated as tax exempt for federal income tax purposes. In the strongest terms, we urge Congress not to alter the overall federal tax treatment of interest on state and local government bonds.”  

Nappier pointed out that these bonds are overwhelmingly issued to fund public infrastructure projects. Bonds are also sometimes issued to raise retirement system funds.  

According to Nappier, without this federal tax exemption on municipal bonds, state and local governments could face higher borrowing costs—as much as $1.9 billion over the next ten years in Connecticut.