US Federal proposals to restrict or eliminate the use of tax exempt bonds by nonprofit health, education and other charitable organizations will impact on project costs, delays and curtailments and eliminate tens of thousands of jobs throughout the country.
A study done for the National Association of Health and Educational Facilities Finance Authorities (NAHEFFA) found that if Congress limited the tax exemption to 28% for municipal bonds that finance health, educational and other charitable projects throughout the United States, 105,000 jobs, $5.5 billion of labor income and $8.3 billion in GDP would be lost annually. If Congress eliminated the tax exemption altogether then the loss would be 300,000 jobs, $15.6 billion of labor income and $8.3 billion in GDP. This means that thousands of hospitals, clinics, colleges, job centers and boys and girls clubs throughout the US that depend on tax exempt bonds to access capital will be affected, particularly those in smaller communities, which are the largest employers in the area and engines for economic growth.
Key findings from study include:
- Nonprofit health and education investment is critical for maintenance of the nation’s welfare, productivity and economic growth. The types of projects funded range from general acute care hospitals, critical access hospitals, children’s hospitals, higher education and private school facilities, libraries, museums, cultural and performing arts centers and senior assisted living.
- A 28% cap on the interest exemption applicable to bonds used by nonprofits for financing would , based on average spending in the past decade, reduce US gross domestic product by $8.3 billion per year, cost the nation 105,000 jobs and $5.5 billion in labor income annually.
- A complete elimination of 501(c)(3) tax exempt financing would reduce gross domestic product by $8.3 billion and lose 300,000 jobs which would have annually generated $15.6 billion in labor income.
From: National Association of Health and Educational Facilities Finance Authorities (NAHEFFA)
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