President Trump and Congress are committed to undertaking comprehensive federal tax reform this year in order to create jobs and spur domestic investments in manufacturing and other industries. They will make adjustments during the transition period as federal tax reform measures take effect. It will entail the balancing of interests that may require interested parties to give a little in one area for the benefit in another area. The extent will not be known until a final tax bill is signed into law and the economic growth that is expected to result when such tax reform materializes.

Key Takeaways:

• Federal tax reform has the potential to dramatically impact revenues and fiscal burdens onto state and local governments.
• Two suggested proposals: the elimination of tax-free public financing (bonds) and the federal deduction on state and local taxes make it harder for non-federal entities to raise capital for infrastructure.
• Local and state government have a seat at the federal tax reform table: the implementation will be gradual and adjustments made as necessary to address fiscal gaps.

“Two suggested tax reform proposals with significant state and local implications are the elimination of tax-free public financing (bonds) and the federal deduction on state and local taxes.”

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