Comments on: A Municipal Bond Cliffhanger

By: Guy Davidson

Guy Davidson — Mon, 03 Dec 2012 18:44:36 +0000

Personally, I hope you are correct—that Congress sees the benefit of tax exemption for municipal issuers and maintains the current tax status of municipal bond interest. However, that is far from certain. In fact, the President has proposed limiting the benefit of tax-exempt interest in his budget, which would effectively tax municipal bond interest for some investors. Interest rates are incredibly low and any change to the tax status of municipal interest would probably impact the longest-maturity bonds the most. As such, for those concerned about changes to the tax code and the potential impact on municipal debt, their focus should be on their longest holdings, and not their entire municipal portfolio. In this way, our advice is anything but a knee-jerk reaction to uncertainty, but rather a prescription to get the biggest benefit for the least number of transactions.

By: Rob Forrester

Rob Forrester — Fri, 30 Nov 2012 17:32:02 +0000

Good information here. Here in California we have high taxes and our clients are concerned about the effect of Prop 30. Thanks for your comments.

By: Mr. Oizo

Mr. Oizo — Fri, 30 Nov 2012 15:50:08 +0000

Nice

By: Loren Behrens

Loren Behrens — Thu, 29 Nov 2012 22:07:34 +0000

I personally believe you are way off base here. Are you looking out for the clients or the brokerage firm and it”s reps. I have been dealing in Muni bonds for about 40 years and there has always been a segment of the political jerks trying to do away with the nature of the tax free status. Sure, they have come in the back door and made the tax free income effect the taxability of other income based on amounts of income a person has, but to change the tax free status would take an act of Congress. Now, with what we have as a congress at this time that could happen, but before it is approved I am sure some of them would realize the effect on their own pocketbooks…higher infrastructure rebuilding costs, same for schools, hospitals and any public paid project for the good of the people in the area(there are standards here) Your doom and gloom approach would be a definite high cost to the consumer or investor who would be using short term investing and multiple purchases over the intermediate to long term, making some sales people and firms happy to receive multiple commissions and concessions. Not so good for the client. I have never seen where the knee jerkers win over the patient believers. Have a good day.