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Obama's Jobs Bill Would Hit Munis (municipal bond tax deductions for "wealthy")
Barron's ^ | September 13, 2011 | RANDALL W. FORSYTH

Posted on 09/13/2011 7:22:44 AM PDT by maggief

Municipal bonds have always been synonymous with tax-free income. That would end if President Obama gets his way.

Under the jobs bill the President sent to Congress Monday, high-income individuals and families would no longer receive interest from state and municipal bonds free completely from federal income taxes, beginning in 2013. The legislation would also reduce the value of tax deductions for taxpayers in the highest bracket.

Specifically, individuals earning over $200,000 and families earning over $250,000 would effectively have the value of tax breaks against the top 35% bracket lowered to the 28% bracket.

(Excerpt) Read more at online.barrons.com ...


TOPICS: Business/Economy; Government; News/Current Events
KEYWORDS: environmentalists; nea; seiu; teachers

1 posted on 09/13/2011 7:22:46 AM PDT by maggief
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To: maggief

OMG. We have got to show this guy the door. He’s gonna kill all reasons to save.

But, I gotta hand it to Mr. Obama, he’s the most talented socialist I’ve ever encountered.

Ugh.


2 posted on 09/13/2011 7:26:56 AM PDT by RexBeach
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To: maggief

I guess he doesn’t want municipalities to fund projects like schools, fire departments, hospitals. It will be kind of hard to fund projects when investors have no incentive to invest.
Epic dunce and moron.


3 posted on 09/13/2011 7:29:19 AM PDT by grumpygresh (Democrats delenda est)
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To: maggief

"One of the ironies of this proposal in the so-called jobs bill is that the measure contains infrastructure spending, some $38 billion worth. It would also create an infrastructure bank to fund such projects.

But reducing demand for bonds issued by state and regional authorities that build highways, bridges, airports, water and sewer systems and transportation projections would hamper the very sort of projects the legislation seeks to encourage."

Obamunism in a nutshell.

4 posted on 09/13/2011 7:32:27 AM PDT by Qbert ("The best defense against usurpatory government is an assertive citizenry" - William F. Buckley, Jr.)
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To: maggief
Obama just wants to transfer money from people who create jobs, and invest in Muni’s to create jobs, to people who do not create jobs. It is a thinly disguised attempt to buy votes for a lame duck president in trouble.
5 posted on 09/13/2011 7:34:05 AM PDT by LOC1 (Let's pick the best, not settle for a compromise.)
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To: grumpygresh

Bingo! If states and cities are less dependent on themsleves, they will be more dependent upon the federal government. That’s the plan.


6 posted on 09/13/2011 7:40:01 AM PDT by Pecos (Constitutionalist. Liberty and Honor will not die on my watch.)
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To: maggief

I’ve said it before and I’ll say it again:Obama and the Democrats are doing everything that they can to hold back, control, hamper, regulate and take from businesses and those who start, own and run them. They are doing everything possible to destroy the economy. Then they scream JOBS, JOBS, JOBS.


7 posted on 09/13/2011 7:41:40 AM PDT by all the best
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To: maggief

This proposal shows how UNserious Zero is. It’s unconstitutional on its face, AND would dramatically raise the cost of borrowing for the Democrat localities he so cherishes. It won’t pass, and he doesn’t want it to pass.


8 posted on 09/13/2011 7:42:35 AM PDT by NativeNewYorker (Freepin' Jew Boy)
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To: RexBeach

He’s a lunatic


9 posted on 09/13/2011 7:44:31 AM PDT by DesertRhino (I was standing with a rifle, waiting for soviet paratroopers, but communists just ran for office)
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To: maggief
Obama's Jobs Bill Would Hit Munis (municipal bond tax deductions for "wealthy")

The words in parentheses were not in the original headline, and they are incorrect. The income from municipal bonds does not create "tax deductions," but, rather, is free from federal tax.

For example, if you have $100,000 in taxable income from your job, and receive $10,000 in interest from munis, you would pay taxes on the $100,000, but not on the $10,000. If, on the other hand, the interest was from corporate bonds, you would owe taxes on the entire $110,000.

10 posted on 09/13/2011 7:48:06 AM PDT by TruthShallSetYouFree ("Nanny Care State" is not a Division 3 football powerhouse.)
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To: TruthShallSetYouFree

My mistake.

Should be phrased “limits on taxable income exclusions” if space permitted. You are free to ping the mods.


11 posted on 09/13/2011 8:00:16 AM PDT by maggief
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To: maggief

It makes the cities and states more dependent of federal dollars. According to plan.


12 posted on 09/13/2011 8:01:56 AM PDT by listenhillary (Look your representatives in the eye and ask if they intend to pay off the debt. They will look away)
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To: maggief

Obama is anti-senior citizen.

1. Obama claims there is zero inflation so senior citizens do not get a COLA increase in their social security check.

2. Obama has reduced the interest rate on CD’s to nearly zero.

3. Now Obama wants to take away the last source of income for senior citizens by taxing them on their municipal bond interest.

Is AARP going to their members?????


13 posted on 09/13/2011 8:04:04 AM PDT by Presbyterian Reporter
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To: grumpygresh

Why would you assume that local pols are borrowing responsibly? I haven’t seen any evidence of that - and there isn’t any. It is hilarious that Obamalini wants to cut-off the local turkeys from pursuing their boondoogles. That will make them want to get their machines in gear for him next November ;-)


14 posted on 09/13/2011 8:05:11 AM PDT by achilles2000 ("I'll agree to save the whales as long as we can deport the liberals")
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To: RexBeach

Do not even give him that credit. He reads what “others” want him to.


15 posted on 09/13/2011 8:11:34 AM PDT by DooDahhhh (ma)
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To: Presbyterian Reporter

This would be a terrible move but would almost certainly apply to new issues and not existing bonds. Existing bonds could actually go up in value due to their scarcity value. Bond prospectuses open issuers to legal liability from a revocation and there are other issues such as states wanting to tax interest on treasury issues


16 posted on 09/13/2011 8:13:42 AM PDT by cmwy
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To: RexBeach

You sure can’t put money in a savings account these days because a checking account makes more interest than a savings accounts, CD or Money Market because it is like a big whopping .75 - 1.25%. I remember when bank interest income was above 5%.

So, now let’s kill the munis too! BIG DEMOCRAT supporters are going to be PO’D to say the least! I’m emailing this story to a few of them right now!


17 posted on 09/13/2011 8:19:21 AM PDT by kcvl
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To: maggief

I assume municipal bond rates would go up. I many localities, municipal bonds are sold and ‘special benefit districts’ are created to pay for roads and sewer, in new housing developments...repaid by homeowners as special assessments. If he pushes the rates up, goodbye housing market.


18 posted on 09/13/2011 8:21:10 AM PDT by lacrew (Mr. Soetoro, we regret to inform you that your race card is over the credit limit.)
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To: maggief

This same kind of nonsense has been tried before, as recent as the 20’s. The results were pure disaster as the big money guys just shifted their wealth out of the country to more lucrative climates. Now with the advances in electronic banking this can be done in a nanosecond. Only the middle classes are hurt by this as they do not have the resources to compete. Jobs of course go along with the wealth.


19 posted on 09/13/2011 8:23:21 AM PDT by Don Corleone ("Oil the gun..eat the cannoli. Take it to the Mattress.")
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To: maggief

Obama needs to be the guy in the Allstate “mayhem” commercials. Everything he proposes wrecks, steals from, and double-crosses good, hard-working productive people in this country.

Obama is nothing but a thug and a common thief.


20 posted on 09/13/2011 8:23:38 AM PDT by RatRipper (I'll ride a turtle to work every day before I buy anything from Government Motors.)
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To: achilles2000

I don’t assume that local pols are borrowing responsibly. It’s the job of the local citizenry to keep their local pols accountable for their actions. Build a school, hopsital, stadium or skating rink or not, that should be the call of citizens in their local municipalities.
But I can tell you one thing, the Federal government will not do a good job of this. In this first case, they are more inefficient than local governments (and both are less efficient than the private sector). But secondly, as you have allluded to, this is nothing more than replacing local governance (with its attendant risk of corruption) with the intentional and far more pernicious corrupting influence of the Federal governemnt and Democrat party.


21 posted on 09/13/2011 8:36:19 AM PDT by grumpygresh (Democrats delenda est)
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To: maggief

The whole deal with tax-free muni bonds is to make them desirable enough that municipalities and other can issue them at below market interest rates. And the only reason buyers are willing to buy bonds that bear below-market rates is that they can make that up with the tax breaks. With no tax break, then munis will have no advantage in the market and will have to bear interest rates comparable to corporate bonds to compete.

Thus what Obama gives with one hand (more Fed dollars for infrastructure) he takes away with the other hand (higher borrowing costs for those very same projects). Naturally, the burden of higher borrowing costs will fall on all entities while only Obama’s favored entities will receive the ill-gotten gains. Typical favoritism by the Obammunists. Financially, this whole thing is nothing more than a shell game, with a net-zero financial result, that is, a typical zero result for a zero President named Zero.


22 posted on 09/13/2011 8:48:27 AM PDT by catnipman (Cat Nipman: Vote Republican in 2012 and only be called racist one more time!)
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To: maggief
Obama is an IDIOT.

Why are muni bonds not taxed by the fed? Because the Fed doesn't want the state's to levy a tax on Federal bonds.

Why is tax free status important? It gives the government the advantage of paying lower rates than the competition.

In effect, this is the Federal government attempting to force investors out of muni bonds and into federal bonds. There will be retaliation.

There will be a negative effect, as both local and federal governments have to increase rates to attract buyers.

23 posted on 09/13/2011 8:52:51 AM PDT by SampleMan (Feral Humans are the refuse of socialism.)
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To: maggief
Obama is an IDIOT.

Why are muni bonds not taxed by the fed? Because the Fed doesn't want the state's to levy a tax on Federal bonds.

Why is tax free status important? It gives the government the advantage of paying lower rates than the competition.

In effect, this is the Federal government attempting to force investors out of muni bonds and into federal bonds. There will be retaliation.

There will be a negative effect, as both local and federal governments have to increase rates to attract buyers.

24 posted on 09/13/2011 8:53:09 AM PDT by SampleMan (Feral Humans are the refuse of socialism.)
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To: grumpygresh
I guess he doesn’t want municipalities to fund projects like schools, fire departments, hospitals. It will be kind of hard to fund projects when investors have no incentive to invest.

But The Sun King and his cronies will get a piece of all such projects from now on via their "Infrastructure Bank", and that's what's important.

The "Infrastructure Bank", if it ever comes to pass, will be the most massive boondoggle of all time. It will dwarf TARP, Porkulus, the S&L debacle, everything.

25 posted on 09/13/2011 8:53:54 AM PDT by denydenydeny (The moment you step into a world of facts, you step into a world of limits. --Chesterton)
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To: catnipman

Very well stated post, precisely explaining a complicated game of more Federal control.


26 posted on 09/13/2011 8:57:12 AM PDT by Stat-boy
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To: Pecos

Indeed it’s the old GM bail out plan then you own them.


27 posted on 09/13/2011 9:08:27 AM PDT by Vaduz
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To: maggief
Under the jobs bill the President sent to Congress Monday, high-income individuals and families would no longer receive interest from state and municipal bonds free completely from federal income taxes, beginning in 2013.

Hey Warren Buffett! Ask, for higher taxes, and you shall receive!

28 posted on 09/13/2011 9:14:01 AM PDT by N. Theknow (Obama and the Dems - The flash mob raiding the Treasury.)
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To: catnipman

Thus what Obama gives with one hand (more Fed dollars for infrastructure) he takes away with the other hand (higher borrowing costs for those very same projects).


well said


29 posted on 09/13/2011 9:28:07 AM PDT by Presbyterian Reporter
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To: maggief

His Democrat buddies who run Democrat cities will not be pleased. Floating bond issues is how they’ve managed to overspend their revenues for five or six decades now.


30 posted on 09/13/2011 9:37:19 AM PDT by Buckeye McFrog
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To: maggief

Hillary is going to run, and the party isn’t going to give her a choice in the matter.

Mayors in big cities are predominantly democrat. Obama seems indiscriminate now. Next he’ll announce a cap and tax on trial lawyer awards.


31 posted on 09/13/2011 9:40:48 AM PDT by RinaseaofDs (Does beheading qualify as 'breaking my back', in the Jeffersonian sense of the expression?)
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To: RatRipper

Amen. One of the best descriptions of him I’ve ever seen.


32 posted on 09/13/2011 9:47:16 AM PDT by John W (Natural-born US citizen since 1955)
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To: maggief

Heh. The Democrats are hitting themselves. Taxing muni bond interest would cut the socialists’ revenues and counteract the huge amounts of federal funding that they receive for regulating against real private businesses.


33 posted on 09/13/2011 11:25:45 AM PDT by familyop (cbt. engr. (cbt), Army NG, '89-' 96)
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To: Vaduz
I was thinking more in terms of the classic “company town, company store” model that is much reviled by unions - at least when the company is a mining company (Heaven forbid there should be any criticism of the government as landlord and benefactor).
34 posted on 09/14/2011 4:11:08 AM PDT by Pecos (Constitutionalist. Liberty and Honor will not die on my watch.)
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To: Pecos

It seems like it’s working that way.


35 posted on 09/14/2011 7:10:18 AM PDT by Vaduz
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