The $823 billion tax bomb threatening America’s communities

With Congress gearing up for a months-long tax debate, the municipal finance community needs to pay close attention.

The 2017 tax cuts are set to expire at the end of the year and policymakers are searching to find new ways to extend and pay for them. Unfortunately, a vocal minority believes eliminating the longstanding tax exemption on local, state, and municipal bonds is one way to do it.

Municipal bonds are an indispensable funding tool for towns, hospitals, and infrastructure projects such as highways and airports. They’re the financial backbone that allows local governments to manage their finances and deliver services for their communities. Ending this exemption would involve classic Washington budget gimmicks. But those gimmicks have real world consequences that would impose long-term costs on working families and local communities all across the country.

This isn’t just another speculative policy debate. It’s based on hard data.

According to a report from the Public Finance Network and the Government Finance Officers Association over $3.3 trillion in infrastructure was built using these bonds and eliminating the municipal tax exemption will cost American communities $823 Billion. That means every American household would see their taxes increase by over $6,500. This debate can’t be had by crunching numbers on a spreadsheet in a smoke-filled room. It must be had by hearing how big-city mayors and small-town councils would be forced to choose between fixing crumbling roads or modernizing local hospitals. It’s about the construction worker wondering if next year’s project—and his job—will still exist or a mom wondering if another school will be built because the one her child attends is overcrowded.

All too often, Washington gets caught up in numbers on a chart and ignores the real-world consequences of its decisions, while America’s working families and rural communities bear the burden of its actions.

Tax-exempt municipal bonds aren’t a loophole—they’re a testament to American ingenuity. They fund the basic necessities like water, safety, and education that we expect from local governments well as innovative energy and solutions that move us into the future. Most important, these bonds allow everyday Americans to invest directly in their communities, creating a virtuous cycle of growth and prosperity. This ensures that both bustling cities and quiet rural towns have a fair shot at building a better future.

The true cost of your $823 billion tax isn’t measured in dollars and cents. It’s measured in shuttered schools, potholed roads, and dreams deferred. We cannot succumb to short-term thinking and gut a system that has served us well for over a century.

America’s strength has always been in its communities, and the municipal tax exemption has played a key part in building communities across this country for generations. The municipal finance community needs to mobilize to make sure we keep it that way.

Christopher A. Iacovella is the President and CEO of the American Securities Association.