Posted on 12/13/2012 12:06:19 PM PST by Starman417
Obama proposed this last year and now its back on the table:
This week, the Wall Street Journals John D. McKinnon and Andrew Ackerman are reporting that House Speaker John Boehner is willing to consider curbing the tax-exempt status of municipal-bond interest, subject to negotiations with the White House.
Reality check...the only reason investors buy muni bonds is because of the tax exempt status. They pay less interest than other bonds that are already taxed so if they are gonna tax the muni's....might as well get the higher interest rate. So what happens then? Local, county and state municipalities will have to get those loans (you know...for bridges and schools and so forth) at a much higher interest rate. Many will not be able to get them at all and be forced to cut services.
Meanwhile it looks like the can is going to be kicked down the road....again:
(excerpt) Read more at floppingaces.net...
“In fact, Obama has already tried to end the tax exempt status of municipal bonds twice before.
Both times he buried this legislation in larger bills.
The first was in the American Jobs Act of 2011 where he tried to sneak in a 7 percent tax increase on municipal bonds.
Obama then upped the ante in the 284-page Debt Reduction Act of 2011, which would start at a 7 percent tax increase with the potential to totally eliminate the tax exemption if Washington failed to meet its deficit targets.
Both times, his attacks were fought off by bond dealers and state lobbyists.
Now, however, a third attack on the tax exempt status of muni bonds has finally surfaced in Obamas 2013 budget proposal.”
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