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December 13, 2012

Re:      A Fiscal Cliff ‘Solution” That Could Threaten Property Taxpayers
            Oppose Elimination of Federal Income Tax Exemption for Municipal Bonds

Dear Mayor:

As the President and the Speaker continue to work towards an agreement to avoid the fiscal cliff, both sides seem willing to  accept one suggestion that would, in one fell swoop, increase property taxes, slow job creation and economic recovery, and hasten the deterioration of our public infrastructure.

At issue is the income tax exemption for interest earned on municipal bonds. Traditionally, municipal bonds offer very low interest rates to investors. They are, however, very safe investments, because they are backed by the full faith and credit of government agencies. Further, they are attractive, because the investor does not have to pay Federal income tax on the interest. By eliminating or severely limiting the exemption, the Federal government could receive more income tax from bond holders.

If the exemption is removed or limited, however, local governments will need to offer higher rates of return. They will, then, find it more expensive to invest in the building or rebuilding of roads, bridges, schools, libraries, water and sewer facilities, fire stations and other projects meant to meet the needs of families and businesses. This will force New Jersey municipalities to either raise property taxes to cover the increased interest, or to forego the needed investments.

If Congress and the President agree to remove this common sense way to keep taxes lower, while producing work for local businesses and jobs for our citizens, and modernizing critical infrastructure, the costs of the these projects will increase and property taxes will rise.

As the January 2, 2013 deadline looms, decisions on this matter, and others relating to the fiscal cliff, can be made quickly.  More information on the need to safeguard tax-exempt municipal bonds is available at

Please contact Senators Lautenberg and Menendez and your Congressman and urge them to oppose any effort to eliminate or limit the ability of municipalities to issue tax exempt bonds.

If you have any questions, contact Jon Moran at 609-695-3481, ext. 121 or

Very truly yours,

Hon. Janice S. Mironov
President New Jersey League of Municipalities
And Mayor, East Windsor Township

William G. Dressel, Jr.
Executive Director





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