[Congressional Record Volume 155, Number 1 (Tuesday, January 6, 2009)]
[Senate]
[Pages S115-S116]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KERRY (for himself, Ms. Snowe, and Mrs. Lincoln):
  S. 138. A bill to amend the Internal Revenue Code of 1986 to repeal 
alternative minimum tax limitations on private activity bond interest, 
and for other purposes; to the Committee on Finance.
  Mr. KERRY. Mr. President, today Senator Snowe and I are introduce 
legislation to exempt private activity bond interest from the 
alternative minimum tax, AMT. My colleague from Massachusetts, 
Representative Richard Neal has introduced similar legislation. Under 
current law, interest paid on private activity bonds is subject to the 
alternative minimum tax. This results in the bonds not being very 
marketable in these difficult economic times.
  Making private activity bonds no longer subject to the AMT would help 
with the issuance of bonds. This legislation would assist in needed 
relief to State and local governments across the Nation. It would 
provide more buyers to the market, resulting in interest savings for 
issuers, and ultimately taxpayers.

[[Page S116]]

  Subjecting private activity bond interest to the AMT could cost an 
issuer 25 to 30 more basis points when issuing an AMT bond compared to 
a non-AMT bond. However, the recent freezing of the municipal credit 
market has led the difference to rise as much as 100 basis points. This 
results in increased costs for various infrastructure projects 
including airports, docks and other transportation-related facilities; 
water, sewer and other utility facilities; and solid and hazardous 
waste disposal facilities.
  Last Congress, I worked on a provision to exempt the interest from 
private activity housing bonds from the AMT and this provision was 
included in the Housing and Economic Recovery Act of 2008. The 
legislation Senator Snowe and I are introducing builds on this 
provision by exempting interest from all private activity bonds from 
the AMT.
  I believe this legislation will help spur the economy and create 
jobs. This legislation will provide better funding options for 
essential infrastructure projects and create jobs across the country. I 
look forward to working with my colleagues on this important 
legislation.
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