Changes in Tax Policy Could Impact State Revenues, Says Fitch

Fitch Ratings has indentified several uncertainties for state and local governments with the new president set to take office in January, including the impact from any tax policy changes. Laura Porter, who heads state ratings for Fitch, says if state and local deductions are reduced or eliminated for taxpayers, that could become an issue for high tax states. Tax rate cuts would also lower the benefit of buying tax-exempt municipal bonds, which could modestly increase the cost of capital for state and local governments, according to Porter.