While fundamental tax reform has not created the same headlines as health reform, a bill introduced in the Senate last week has added to the concerns of hospital and health system CFOs. The Bipartisan Tax Fairness and Simplification Act of 2010 (S. 3018), commonly referred to as the "Wyden-Gregg Bill" after the bill's sponsors, Sens. Ron Wyden (D-Oreg.) and Judd Gregg (R-N.H.), seeks to simplify the current federal income tax system through a number of fundamental changes. Among them is the elimination of tax-exempt bonds beginning in 2011 in favor of a tax credit program coupled with a prohibition on advance refunding of bonds.

Senator Wyden, a member of the Senate Finance Committee, reportedly was the primary proponent of the provisions concerning tax-exempt bonds. According to a joint statement issued by the Senators: "Wyden-Gregg changes tax-exempt bonds to tax-credit bonds as part of its overall effort to lower tax rates by broadening the tax base. This was a sensible option for not only broadening the base but for making the tax code more equitable, because -- unlike a tax exemption -- a tax credit allows taxpayers at all income levels to realize the same tax benefits."

Spokespersons for several organizations that represent various segments of the tax-exempt bond market quickly announced their opposition to these provisions. Baker Hostetler does not anticipate that the Wyden-Gregg Bill will become a legislative priority in the immediate future.