What the New Administration's Agenda Will Mean to Municipal Finance
On January 26, Financial Research Associates hosted the webinar The Trump Administration the First 100 Days and What Their Agenda Will Mean to Municipal Finance featuring the Volcker Alliance State and Local Program Director William Glasgall as well as Governing's Liz Farmer and Municipal Markets Analytics' Matt Fabian. Financial Research Associates describes the webinar context as follows:
"With a Trump win in November, he promises one of his primary issues will be the tax plan. His plan would simplify the tax code, cut taxes for the middle class and grow the economy without adding to the debt or deficit. Some say his plan could hurt munis due to the lower tax rates. His plan is defined by its across-the-board tax cuts. The tax brackets would be reduced to four brackets from seven and set at rates of 0%, 10%, 20% with a top rate of 25%. Businesswise, Trump expects to reduce the corporate income tax rate to 15%. The Tax Foundation estimates his plan would reduce tax revenues by $10.14 trillion, increase the GDP by 11%, create an estimated 5.3 million new full-time jobs, increase the federal deficit by $10 trillion+ and ultimately would increase the size of the U.S. economy.
The muni bond market is valued at $3.8 trillion and is considered a safe investment for individuals because any interest paid is not federally taxed. Many states follow this example and exempt taxing the interest on their bonds to enable financing infrastructure projects (roads and schools).
Trump’s plan could mean a reduction in the incentives for purchasing munis, in turn meaning an increase in the federal debt resulting in the failure to offset spending reductions. This would be devastating for states and local governments and its effect on the nation’s on public infrastructure."
Listen to the full webinar below by entering the password: Rec624Trump
