In a stunning turn of tables, even the tax-free nature of muni-bonds are on the chopping block in our current buget turmoil.
Many of our readers are heavily invested in Munis so this article wil lsurely be important, interesting and relevant.
Here’s the Source:
And here’s a key summary:
By exempting municipal bond interest from federal taxes, the government creates an incentive for investors to buy them, which helps hold down the borrowing costs of the states, cities and other entities that issue them. Curbing the exemption would likely reduce demand for the bond
Investors are willing to accept lower yields for municipal bonds because their interest income is exempt from federal income taxes and from taxes in the state in which the bonds were issued. In some high-tax areas, such as California, the bonds are also exempt from local income taxes.s, pushing those borrowing costs higher.