Shekarchi blasts Trump tax plan for provision that will raise municipal borrowing costs
STATE HOUSE – House Majority Leader K. Joseph Shekarchi today decried President Trump’s tax plan over a surprise provision that would raise municipal borrowing costs, hurting every Rhode Island city and town as well as taxpayers.
The proposal would eliminate all activity bonds, which are tax-exempt municipal bonds for projects built by private developers for public benefit. The tax-exempt status of those bonds means lower interest rates and therefore lower total borrowing costs of financing. Typically, such bonds are used to finance projects that help the public, such as low-income housing, airports and hospitals. Their proposed elimination came as a surprise to those who work with public financing, since the Trump Administration had indicated an interest in expanding their use, not eliminating them. The move will hurt T.F. Green Airport.
Leader Shekarchi (D-Dist. 23, Warwick) said the bill’s elimination of the bonds is yet another way it hurts average Americans while masquerading as a tax-cutting measure.
“Everybody likes a tax cut, and we’re all for a fairer tax code. But this proposal is not fair and would do serious damage to Rhode Island’s cities and towns. Most of the attention is on who wins and who loses under the individual income tax provisions. But eliminating activity bonds is an under-the-radar way the Trump tax plan will affect regular people, because it’s ultimately going to lead to higher property taxes and less investment in public projects,” said Leader Shekarchi.
Without the tax-free option, those public projects that are built in this manner will need to use higher-interest taxable financing options, which will increase their overall costs significantly.
Leader Shekarchi said he also finds troublesome the plan’s cap on the mortgage-interest deduction for homeowners, which will significantly affect homeownership.
“Owning your own home has always been the American Dream, and we should be doing everything we can to assist people with that goal,” said Leader Shekarchi.
Leader Shekarchi urged Rhode Island’s federal delegation to address the issue in federal legislation moving forward.
For more information, contact:
Meredyth R. Whitty, Publicist
State House Room 20
Providence, RI 02903