1. Obama proposes new muni- bonds for public private investments Rachar Brown

2. The muni-bond plan The bonds are called QPIB’s (Qualified Public Infrastructure Bonds), to help spur public-private partnering for investing in infrastructure projects According to the Obama Administration, “QPIBs will extend the benefits of municipal bonds to public private partnerships, like partnerships that involve long-term leasing and management contracts, lowering the cost of borrowing and attracting new capital,” the bonds will serve “as a permanent lower cost financing tool to increase private participation in building our nation’s public infrastructure.”

3. Purpose On Feb. 2 nd, Obama put a initial four-year price tag of 1.3 billion on the project As a part of his 3.99 trillion U.S. budget proposal, the bonds would cost 4.8 billion over the next decade from 2016-2025 The QPIBs will build on the idea of Private Activity Bonds (PABs) However, unlike the PABs, the bonds will not have a cap on issuance and the interest would not be subject to the Alternative Minimum Tax

4. Compared to BABs Another program to finance infrastructure, called Build America Bonds (BABs), was popular but lasted just two years, expiring in 2010. The taxable debt was created in the 2009 economic stimulus plan and pays issuers a rebate equal to 35 percent of interest costs. Critics said the program was too expensive to extend for another 10 years at an estimated cost of $7.46 billion. As a result of this, Obama has proposed to cut tax breaks on municipal bond interest for high-income earners to 28 percent from 35 percent. Saving the government over 2.4 billion for the decade.

5. Tax Threats Many bond investors are concerned on the 28% cap on income tax deductions The reduction in exemptions from 35% may deter a lot of individuals from investing in them Revenues Expenditures Taxes Tax Base 7%