Scaled-Back Dividend Plans Ease Muni Market Threat

Ferris, Craig T.
May 2003
Bond Buyer;5/12/2003, Vol. 344 Issue 31633, p4
Trade Publication
The U.S. Congress removed a threat to the municipal bond market during the week ended May 11, 2003 when the full House and the Senate's tax-writing committee approved separate tax cut bills that each contain drastically scaled-back plans to exempt corporate dividends from taxation.The action by the House, which approved its $550 billion bill on a 222-to-203, largely party-line vote, and the Senate Finance Committee, which adopted its$ 350 billion on a 12-to-9 vote, effectively rejected President Bush's proposal to exempt from taxation 1004570360f certain corporate dividends.Both the original finance committee plan and Bush's plan would not have allowed corporations to pass along interest they earn from municipal bonds to their shareholders as tax free.Several other muni amendments that either were not brought up by their sponsors or were not considered by the committee included two proposals to allow state and local governments to do one additional advance refunding within the next two years, one to allow an added refunding for elementary and secondary school bonds, a plan to double to$ 20 million the aggregate bond and capital expenditure limit for small-issue industrial development bonds, and a proposal to expand and improve the qualified zone academy bond program for two years.


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