SENATE BILL: Municipal Bond Act (Law'd)

[Southern Senator North Carolina Yankee]

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Sponsor: TyriontheImperialist

[Southern Senator North Carolina Yankee]

Okay what is this Tyrion? 24 hours to start explaining it.

[Sec. of State Superique]

Support this!

[President Tyrion]

Municipal bonds are, in essence, the best way by which smaller jurisdictions can borrow money without involving a higher governmental body. A bond is basically borrowing directly from the people. Making them tax exempt  incentivizes people to buy bonds while lowering interest rates (something we need right now). The lowered interest rates also make municipal bonds an attractive channel for borrowing for the jurisdictions themselves, since it's likely more expensive to borrow money via other avenues.

[TNF]

I am totally supportive of this legislation.

[Fmr. Pres. Duke]

This is right up my ally. Of course I would support this bill.

[Goldwater]

I can support this, although I am curious to see what the arguments against it are.

[tmthforu94]

Essentially what Goldwater said - interested in what the argument against is.

[Sec. of State Superique]

There would only be one argument, the super rich will try to hide from taxes by buying municipal bonds...

[🐒Gods of Prosperity🔱🐲💸]

Might the increased demand for bonds resulting from this legislation encourage municipalities to take on more debt than they can pay back?

[President Tyrion]

Might the increased demand for bonds resulting from this legislation encourage municipalities to take on more debt than they can pay back?

There would only be one argument, the super rich will try to hide from taxes by buying municipal bonds...

Both interesting points.

Shua, I'd say you have somewhat of a point there, but I think the benefits outweigh that negative in such a case. Most municipalities will issue bonds for spending projects which were already approved, which means all this would do is lower the cost of that already-approved spending. There will certainly be municipalities which take on too much debt, but it's better for that debt to be "cheaper", which in this case it would.

Superique, I do think the rich own a large portion of the financial assets in the country, so, naturally, more rich people will be affected by this legislation. That's the same case as legislation on the stock market, for example.

The reason I think this is justified is not that rich people can "hide" their money. Instead, rich people can basically use their disposable income to fund public works projects. It's a win-win; they get a competitive return, and smaller municipalities are better off. Rich people are better equipped to take advantage of this tax structure, but I would note that the financial markets run to equilibrium fairly quickly, in that interest rates dropping would essentially make this investment on par with other forms of financial assets, which may be taxable and also see a higher return.

[Fmr. Pres. Duke]

Might the increased demand for bonds resulting from this legislation encourage municipalities to take on more debt than they can pay back?

I think the risks are outweighed by the benefits of this legislation. Ultimately, if we see municipalities taking on too much debt, then maybe we consider repealing this, but it is my hope most of them have competent leadership (perhaps I am being too optimistic, but oh well).

[President Tyrion]

Might the increased demand for bonds resulting from this legislation encourage municipalities to take on more debt than they can pay back?

I think the risks are outweighed by the benefits of this legislation. Ultimately, if we see municipalities taking on too much debt, then maybe we consider repealing this, but it is my hope most of them have competent leadership (perhaps I am being too optimistic, but oh well).

Well, municipalities do much worse things, like tax increment financing. If there's one thing that I'm sure of, it's that they're going to borrow no matter what, whether it be from the people, the government, or their own futures.

[Southern Senator North Carolina Yankee]

So where does that leave us?

[Sec. of State Superique]

In Brazil, we have laws that control the debt of municipalities...

[President Tyrion]

In Brazil, we have laws that control the debt of municipalities...

That's probably not going to fly here.

[President Tyrion]

Might the increased demand for bonds resulting from this legislation encourage municipalities to take on more debt than they can pay back?

I think the risks are outweighed by the benefits of this legislation. Ultimately, if we see municipalities taking on too much debt, then maybe we consider repealing this, but it is my hope most of them have competent leadership (perhaps I am being too optimistic, but oh well).

This does make me wonder whether local governments in Atlasia have the same massive unfunded pension obligations as their RL cousins. (I'm not commenting as GM here, I'm just genuinely curious about this. Although I guess I would be the one to answer it. )

I would assume so, but then I would just ask you.



I am also ready for a final vote.

[Southern Senator North Carolina Yankee]

Okay then,


A final vote is now open on thisl egislation, Senators please vote Aye, NAy or Abstain.

[Goldwater]

AYE

[Southern Senator North Carolina Yankee]

AYE

[PPT Spiral]

Nay

[Chancellor Tanterterg]

Aye

[TNF]

Aye

[Talleyrand]

AYE

[tmthforu94]

Aye