This Affects YOU: How GOP tax overhaul makes it harder to pay for infrastructure in U.S.

If you drive on bridges and roads, you've noticed some are in serious disrepair. Investment in US infrastructure is now one of the losers from the Republican tax plan. In this CBS report form Dec. 19th, you'll learn how the Tax Cut for the rich has made repairs unlikely. 

  I've edited (simplified and shortened the CBS article to make it easier to read). 

   THIS AFFECTS YOU- Because Trump PROMISED to fix Infrastructure and his newly passed Tax Law removes the funding the U.S. would use and gives it to the Wealthy.  

So, Trump voters, don't complain when your federal roads, and bridges are falling apart. You fell for more if this administration's false promises. 

  Here's the CBS Article.

By Daniel Bergstresser /CBS News/December 28, 2017

President Donald Trump promised during the presidential campaign and after his election to lead an upgrade in our nation's infrastructure, announcing in February 2017, for instance, that he would ask Congress to approve programs designed to stimulate $1 trillion in infrastructure investment across the country. At least up to this point, the President's promises with respect to infrastructure remain unfulfilled. Furthermore, the recently passed tax bill that he signed last week may create some challenges for the municipal bond market and the infrastructure sector.

The facts

• Bridges, schools, police stations, sewer systems, levees and airports, as well as other forms of infrastructure, are essential for economic activity in America and elsewhere. Our infrastructure has aged and deteriorated in important ways (see here). The American Society of Civil Engineers recently gave U.S. infrastructure a grade of D+ 
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• The municipal bond market has been an important source of financing for infrastructure investment (see this Econofact memo). Proceeds from bond issuance paid for about 32 percent of infrastructure investment in 2015, with the rest of the funding for infrastructure coming directly from a mix of sources that includes the federal government, state and local governments, and dedicated fees. The recently passed tax bill will pose some immediate challenges for the municipal bond market and for issuers of municipal bonds, and also raises the potential for longer-term challenges.

• One direct effect of the tax legislation on the municipal market is the elimination of the tax deduction for "advance refunding" municipal bonds.A bond may have a 30-year maturity but be callable after 10 years, meaning that the issuer would have the right to buy the bond back and retire it after 10 years. This provision allows issuers to take advantage of falling interest rate levels. Current tax rules allow a municipal issuer to "advance refund" (one time) an issue that is not yet callable. The loss of the advance refunding provision raises the potential cost of issuing municipal bonds by limiting the ability to refinance debt in response to decreasing interest rates.

• The deliberations regarding the tax bill raised uncertainty regarding the tax-exempt status of Private Activity Bonds (PABs) going into the future. PABs are tax-exempt bonds issued to finance the construction of private-sector facilities that have a significant public purpose like financing low-income housing.   Congressional Republicans say the question of tax exemption for PABs may be revisited very soon. The loss of this financing channel would be an important change in the overall market and a particular shock to important subsectors of the market such as housing.
• The impact of the tax law on state and local finances could also affect infrastructure spending. State and local expenditures account for roughly three quarters of total spending on infrastructure. But state and local governments will likely face an important new headwind in raising revenues under the new law: The new tax law will cap federal tax deductions for state and local taxes (the SALT deduction) at $10,000 which will make it more expensive for individuals who itemize their deductions for their state and local taxes and will thus hurt the taxing capacity of cities and states. This is particularly important in higher-tax areas such as New York and California.
• A medium-to-longer term impact of the new tax law will significantly increase the federal debt. If one begins with the presumption that this debt must be repaid, then the resources will eventually have to come from somewhere. The need to raise additional funds to pay the DEBT means that the tax exemption for important municipal bond market sectors remains very credibly threatened in the future. This drain in resources to repay the federal debt does not augur well for future investment in infrastructure and for our ability to close our existing infrastructure gap.

VIDEO: https://youtu.be/aJpdOULJfSc

Shortly after the deadly Amtrak crash in Washington, President Trump tweeted the crash "shows more than ever" why an infrastructure plan "must be approved quickly." Although he called it "soon to be submitted," a plan has yet to be seen. Mr. Trump made infrastructure reform a key part of his campaign. Politico transportation editor Kathryn Wolfe joins CBSN to discuss.

What this means

Infrastructure is essential for economic activity and growth, but our nation has accumulated an infrastructure "debt." President Trump's campaign promises to stimulate investment in infrastructure remain unrealized, and the new tax law will create some challenges for that market. And the move away from federal fiscal balance means that the municipal tax exemption may come under threat in later rounds of budget balancing.
Daniel Bergstresser is an associate professor at the Brandeis International Business School at Brandeis University whose research focuses on municipal finance and on the impact of taxation, regulation, and market structure on financial markets. This memo was first published by EconoFact, a nonpartisan source of economic facts and analysis published by the Edward R. Murrow Center for a Digital World at the Fletcher School at Tufts University.