S&P 500
7,401.00
+0.91%
Dow Jones
49,665.70
+0.19%
Nasdaq 100
29,241.00
+2.43%
Russell 2000
2,860.88
+0.82%
FTSE 100
10,263.70
+0.48%
Nikkei 225
63,767.70
+2.68%

Investing

Another Research Case on Muni Bonds Losing Tax-Exempt Status

Photo of Jon C. Ogg
By Jon C. Ogg Updated Published
Follow 24/7 Wall St. on Google
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Invalid Image
Interest payments on municipal bonds are tax-exempt from federal income tax for the most part.  There have been attacks over this in the past, all of which have failed to go anywhere.  Imagine how many states and municipalities (and their agencies) would go bankrupt if there borrowing rates ratcheted higher… Still, in the research notes this afternoon we see that Janney Capital Markets’ Fixed Income Weekly report is challenging the notion of the tax-free status for muni’s.

Again, this challenge has arisen before.  It has always failed.  Janney pointed out that this tax-exempt status was brought up in 2010 as a part of Simpson-Bowles

Janney’s Alan Schankel was quoted, “We believe that curtailment or elimination of the tax exemption is a strong possibility in 2013 and beyond, as a new congress (hopefully) attacks the fiscal cliff problem and the ever growing federal deficit.” 

The argument is not an all or none situation according to Janney:

  • “Smaller and core municipal borrowers would be most hurt with higher borrowing costs, so, along with their core public purpose mission, they have a stronger argument for retention of the exemption. More peripheral borrowers such as higher education and healthcare organizations have a weaker justification for the tax exemption.”

We would caution yet again that attacks to limit, alter, or kill the tax-free status of muni bonds is not a new notion.  That being said, all efforts on this front have failed over and over.

JON C. OGG

Photo of Jon C. Ogg
About the Author Jon C. Ogg →

Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.

Continue Reading

Jon C. Ogg |

In the Pursuit of Wealth Destruction, Muni Bond Tax Seems Unlikely

The American Jobs Act is a bill which is supposed to be “fully paid for.”  It isn’t.  In the attack…

Lee Jackson |

UBS Highlights Top Tax-Free Closed-End Municipal Bond Funds to Own (NUV, NXR, NXQ, NCA, NNY, UBS)

ThinkstockThe great debate over the budget and reducing the gigantic U.S. deficit continues to dominate the network, cable, print and…

3 Municipal Bond ETFs Retirees Are Using to Generate Tax-Free Income in 2026
David Beren |

3 Municipal Bond ETFs Retirees Are Using to Generate Tax-Free Income in 2026

For investors in higher federal tax brackets, the headline yield on a municipal bond fund understates the real value of…

High Earners Who Pay 37% to the IRS Actually Have an Easy Workaround Now | PZA
Austin Smith |

High Earners Who Pay 37% to the IRS Actually Have an Easy Workaround Now | PZA

High earners face a painful reality with taxable bonds, the IRS claims up to 37% of every interest payment. A…

$1 Million in Municipal Bonds Generates $50,000 Tax-Free Income That Beats Treasury Returns
Gerelyn Terzo |

$1 Million in Municipal Bonds Generates $50,000 Tax-Free Income That Beats Treasury Returns

A $1 million municipal bond portfolio yielding 5% generates $50,000 per year in interest income that the federal government cannot…

Douglas A. McIntyre |

Nuveen: Florida Closed-End Muni Funds Roll Into National Funds (NIO, NPM, NEA)

Nuveen has been the largest player in single-state municipal bond closed-end and open-end bond funds for years and years.  If…

Wealthy Retirees Have A Special Loophole With A High Yield Municipal Bond ETF
Michael Williams |

Wealthy Retirees Have A Special Loophole With A High Yield Municipal Bond ETF

When retirees face higher tax brackets from pension income, Social Security, and portfolio withdrawals, every percentage point of yield eaten…

The Income Strategy That Pays High Earners More After Tax Than a 7% Taxable Bond
Gerelyn Terzo |

The Income Strategy That Pays High Earners More After Tax Than a 7% Taxable Bond

A 30-year AA-rated municipal bond currently yields 4.75%, and that number looks modest next to a 7% corporate bond. But…

Why High Earners in the 37% Tax Bracket Are Switching From Treasuries to Municipal Bonds
Gerelyn Terzo |

Why High Earners in the 37% Tax Bracket Are Switching From Treasuries to Municipal Bonds

A 4.5% municipal bond yield and a 4.29% 10-year Treasury yield look nearly identical on paper. For someone in the…

Top Gaining Stocks

Akamai
AKAM • Vol: 21,556,944
Micron Technology
MU • Vol: 65,135,624
Intel
INTC • Vol: 227,504,426
Monster Beverage
MNST • Vol: 15,284,847
Dell Technologies
DELL • Vol: 12,167,525

Top Losing Stocks

Mettler Toledo International
MTD • Vol: 539,266
Motorola Solutions
MSI • Vol: 3,101,643
Expedia
EXPE • Vol: 4,189,786
Coterra Energy
CTRA • Vol: 73,319,495
Fidelity National Information Services
FIS • Vol: 11,468,820