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