[Conservative Infidel]

I disagree. I think that the yield on all bonds will go up. Good for me as an investor. However, bad for me as a local taxpayer. Also, it will force the munis to raise the rate just to compete against capital bonds, since there is no longer a tax exempt status.

[4edm 4ever]

Muni bonds give you an example of which direction rates would go. Their yield is about 25% less than similar duration corporate bonds. The difference is tax risk. Corporate bonds must pay more to overcome taxation (as ordinary income today) and compete with bonds. When taxation is removed, rates drop.

Last night I mentioned this was per an economist at the Federal Reserve Bank of St Louis. It was John E. Gobb at the Federal Reserve Bank of Kansas City and also in a paper by Martin Feldstein. You can find those references in the footnotes here: http://www.fairtax.org/pdfs/interestrates.pdf and information on how bondholders might be effected with footnotes to research here: http://www.fairtax.org/pdfs/bondholders.pdf