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The Securities Industry and Financial Markets Association’s (SIFMA) head of global advocacy, Michael Paese, today said the following after the summary of the tax title of the stimulus bill was released:
“The current financial crisis has had serious and negative consequences for municipalities across the country. And while a number of federal programs recently have been devoted to the larger financial market turmoil, the skyrocketing borrowing costs and shrinking markets facing America’s cities and states had gone unaddressed, until today.
“This stimulus bill provides crucial tax law changes that will ease borrowing costs for cities and states and expand the market for their bonds – both crucial steps towards ensuring the nation has the hospitals, bridges and other infrastructure it needs."
The available summary explains that the bill:- Exempts tax-exempt bonds from individual and corporate AMT, thereby reducing issuer’s borrowing costs. The exemption applies to bonds issued in 2009 and 2010 and refunding of bonds issued in the last five years
- Changes tax law to encourage financial institutions to become buyers of muni bonds
- Changes the definition of “small issuer” of securities from $10 million to $30 million annually, which will allow more municipalities to meet the definition, which lowers the borrowing costs for those issuers and expands the markets for their bonds
