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Municipal bond investors may not be pleased on a rare spot of agreement between the White House...

Municipal bond investors may not be pleased on a rare spot of agreement between the White House and the GOP: A willingness to subject to tax a portion of municipal bond interest paid to higher-income households (are there any muni bond holders who aren't higher income?).
Comments (9)
  • PalmDesertRat
    , contributor
    Comments (2403) | Send Message
     
    this will help to raise the cost of financing for state & local governments,other t/e issuers. It will be interesting to see how this develops.
    12 Dec 2012, 09:04 AM Reply Like
  • Van Hyder
    , contributor
    Comments (159) | Send Message
     
    They should eliminate the tax shelter on munis for everybody. Let's do some real "fair share"!
    12 Dec 2012, 09:05 AM Reply Like
  • rheimerl
    , contributor
    Comments (325) | Send Message
     
    your idea would "cripple" municipalities ability to borrow at attractive rates... there is always a "cause" and "effect"
    12 Dec 2012, 09:09 AM Reply Like
  • kmi
    , contributor
    Comments (3967) | Send Message
     
    What is bad about crippling municipalities ability to borrow? The ease of borrowing has precisely led to poor management by local governments of their finances. Municipalities should not be borrowing just to close their budgetary gaps, they should prefer balanced budgets first. That will lead to fiscal responsibility.
    12 Dec 2012, 09:43 AM Reply Like
  • Tricky
    , contributor
    Comments (1570) | Send Message
     
    From what I understand, this proposal will not be easy to make stick -- tax exemption on muni bonds is a Constitutional issue (state's sovereignty issue).

     

    Expect a fight that goes all the way to the Supreme Court, and probably relatively quickly.
    12 Dec 2012, 09:07 AM Reply Like
  • youngman442002
    , contributor
    Comments (5131) | Send Message
     
    I think cities should not use financing as much as they do.....use cash...save their tax revenues to build what ever they want.....again the build...spend now...pay later....I hope that whole mindset changes...
    12 Dec 2012, 09:13 AM Reply Like
  • Poor Texan
    , contributor
    Comments (3528) | Send Message
     
    Financing should only be for long-term capital projects. The problem comes when those funds are raided for current expenses.
    12 Dec 2012, 10:56 AM Reply Like
  • fxdudeinmia
    , contributor
    Comments (491) | Send Message
     
    To your question, (are there any muni bond holders who aren't higher income?). Emphatically, the answer is yes. With T-bills, money market funds and bank CD's offering rates virtually zero, the yields on tax-exempt munis have been incredibly attractive to all investors, even those in lower tax brackets. Just 2 years ago when Meredith Whitney gave everybody a gift on her idiotic sell recommendation, many high quality munis could be had with yields close to 5%. Many people such as myself, in 25% tax brackets or even lower, found that irresistible.
    12 Dec 2012, 09:21 AM Reply Like
  • Poor Texan
    , contributor
    Comments (3528) | Send Message
     
    Not enough money there to make a difference. Until we discuss a net worth tax this is all window dressing.
    12 Dec 2012, 11:02 AM Reply Like
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