Responding to the attacks on municipal bonds
Tax-exempt financing for public power is under attack. Before the 1980s, state and local governments routinely issued tax-exempt debt to finance an array of public purposes, such as schools, bridges, roads, parks, public purposes, such as schools, bridges, roads, parks, public buildings, sewers and water services, and electric power facilities. The issuance of tax-exempt debt provided a sound, low-cost means of financing local public investments. On April 20, 1988, the Supreme Court ruled in South Carolina v. Baker that the tax exemption is not guaranteed by the Constitution, but derives from the legislative authority of Congress. Although the decision had no immediate consequences on the status of outstanding tax-exempt issue, it opened the door for increased tampering by a Congress in search revenues. The Supreme Court decision reinforces the legislative trend toward placing additional restriction on tax-exempt financing. Most of this article is devoted to 5 of the most common attacks on tax-exempt financing and the appropriate responses.
- OSTI ID:
- 5152492
- Journal Information:
- Public Power; (USA), Journal Name: Public Power; (USA) Vol. 47:2; ISSN PUPOA; ISSN 0033-3654
- Country of Publication:
- United States
- Language:
- English
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