Another reason bond costs will go up.

The lowering of the 35% corporate tax rate down to 21% will cause our local government borrowing costs to go up.

Why?

Investors tend to favor making loans where they make the most money and have the greatest assurance that they will get their original money back.

Before the change in corporate rates investors chose between government bonds where the interest rates were lower than commercial bonds but where the government bonds generated tax free income.

Now with a 21% corporate tax rate investors will understand that lending to companies will be safer because the companies will be paying less tax and thus make more money.

Local governments will have to offer  higher interest rates to investors if they want to compete for money.

Remember that between the city and the school districts we have over $1.5 billion of bonds that have been authorized but not sold yet.

Continuing down the path of going into debt is going to cost us more now.

We deserve better

Brutus

One Response to Another reason bond costs will go up.

  1. lol @ EP says:

    The article implies that local government cares anything at all about the taxpayer burden on the local population. Maybe they should publish a chart of tax increases over the last twenty years.

    The premise of government entities borrowing money to achieve positive monetary results for the citizens is laughable to everyone except the taxpayers. None of the so-called Quality of Life spending has achieved a single monetary gain to El Paso, it is a negative result and the money is not even all spent. The ballpark is also a net negative to the taxpayer. The EPISD bond and the YISD bond will equally negatively impact taxpayers and there will be no net positive, monetary or otherwise, now or in the future to the taxpayers of El Paso. The idea that government employees can give themselves raises and new buildings for no reason and for no expected results is ridiculous while at the same time being effective. Teachers have to do nothing different, faculty have to do nothing different. El Paso schools will be just as low-performing in the future as they are now. They have simply rewarded themselves for a job poorly done having convinced taxpayers to pay for their raises and new buildings.

    Government is the only place where failure is rewarded, the deeper the failure the higher the reward. Remember that if you ever try to discuss your tax bill with a CAD bureaucrat.

    Like

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