Revenues
Eliminate the Tax Exemption for New Qualified Private Activity Bonds
CBO periodically issues a compendium of policy options (called Options for Reducing the Deficit) covering a broad range of issues, as well as separate reports that include options for changing federal tax and spending policies in particular areas. This option appears in one of those publications. The options are derived from many sources and reflect a range of possibilities. For each option, CBO presents an estimate of its effects on the budget but makes no recommendations. Inclusion or exclusion of any particular option does not imply an endorsement or rejection by CBO.
| Billions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2015-2019 | 2015-2024 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Change in Revenues | 0.1 | 0.5 | 1.0 | 1.6 | 2.3 | 3.2 | 4.1 | 5.0 | 5.9 | 6.5 | 5.5 | 30.2 |
Source: Staff of the Joint Committee on Taxation.
Note: This option would take effect in January 2015. Estimates are relative to CBO’s April 2014 baseline projections.
The U.S. tax code permits state and local governments to finance certain projects by issuing bonds whose interest payments are generally exempt from federal income taxes. For the most part, proceeds from tax-exempt bonds finance public projects, such as the construction of schools and highways. In some cases, however, state and local governments issue tax-exempt bonds—which are known as qualified private activity bonds—to fund private projects that provide at least some public benefits. Eligible projects include the construction or repair of infrastructure and certain activities, such as building schools and hospitals, undertaken by nonprofit organizations. This option would eliminate the tax exemption for new qualified private activity bonds.