Macro and Market

Infrastructure and Tax Proposals Lift Muni Market’s Profile

By David Moore, Greg Torretti
JUN 07 | 2021
Looking at a bridge at sunrise.

Key Takeaways

  • We believe the traditional infrastructure projects highlighted in the proposed American Jobs Plan support the municipal (muni) market.

  • The proposal to raise corporate taxes to pay for the projects could fuel demand for tax-exempt munis, which would benefit the muni market overall.

  • We believe the American Jobs Plan promotes job gains and productivity, which ultimately should support economic growth.

  • Despite the Democrats’ control of Congress, there’s some room for negotiation on the tax rate and size of the infrastructure plan.

  • We expect most spending provisions of the legislation to pass, largely because Senate Democrats might use the budget reconciliation process to avoid a Republican filibuster.

President Joe Biden recently revealed his American Jobs Plan (AJP), a massive eight-year spending proposal for infrastructure and other projects. The plan’s original $2.3 trillion price tag would equal approximately 1% of annual U.S. gross domestic product (total economic output in goods and services) in each year of the legislation’s lifespan. The Biden Administration has subsequently proposed reducing the size of the plan. The administration is seeking higher corporate taxes to pay for the legislation.

We believe higher tax rates, along with the AJP’s infrastructure mandates, should benefit the muni market and muni investors. We also expect the proposal to promote job growth and broad U.S. economic gains.

Read the full report below.

David Moore

David Moore

Director of Municipal Research

Greg Torretti

Greg Torretti

Senior Director Product Management

Market Perspective: Infrastructure and Tax Proposals Lift Muni Market’s Profile

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