Building a Better America: Tax Expenditure Reform and the Case of State and Local Government Bonds and Build America Bonds

49 Pages Posted: 14 May 2020

See all articles by Blaine G. Saito

Blaine G. Saito

Northeastern Univeresity School of Law

Date Written: April 28, 2020

Abstract

Currently, most subnational government borrowing in the United States is done via tax-exempt muni bonds. But these bonds are riddled with problems. They are inefficient at delivering the subsidy, and they create economic distortions of investment choices. They are inequitable, and they have significant democratic deficiencies. Direct payment Build America Bonds (BABs) provide a better alternative, as they directly pay a cash subsidy to a subnational govern- ment. There are simple, technical problems that can easily be remedied, but BABs also face significant political hurdles that will prevent the permanence of the program. Policy entrepreneurship is a way forward. This article also discusses how the analysis used here can also be used on other tax expenditure matters.

Keywords: Taxation, Municiple Bonds

JEL Classification: K34, H74

Suggested Citation

Saito, Blaine G., Building a Better America: Tax Expenditure Reform and the Case of State and Local Government Bonds and Build America Bonds (April 28, 2020). Georgetown Journal of Law & Public Policy, Vol. 11, No. 2, 2013. Available at SSRN: https://ssrn.com/abstract=3587739

Blaine G. Saito (Contact Author)

Northeastern Univeresity School of Law ( email )

220 B RP
Boston, MA 02115
United States

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