The American Hospital Association and more than a dozen government, not-for-profit and public finance organizations, in a letter (PDF) to lawmakers, praised a bill that would revive tax incentives for banks to buy municipal bonds.
AHA, finance groups want tax incentives revived
The groups “strongly support” the Municipal Bond Market Support Act of 2011 that would restore credit-relief provisions of the American Recovery and Reinvestment Act that expired in December.
Under the provision, banks could receive tax incentives to buy bonds up to $30 million, per borrower. The limit dropped to $10 million—the same amount prior to the stimulus law—for each authority with power to bring borrowers’ debt to market at the end of last year.
The AHA and other organizations argued the more generous limits included in the newly introduced bill (PDF) could aid small borrowers and lower financing costs by allowing borrowers to avoid underwriting expense. The letter said the existing $10 million limit was established 26 years ago and has not been adjusted for inflation. “In today’s dollars, that $10 million is worth $5.4 million, and even the smallest of governments have annual capital needs exceeding that amount,” the letter said.
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