Commentary: The Zero-Sum Game of an Exemption Cap

APR 12, 2013 10:38am ET

The proposed cap of 28% may be a zero-sum game at best because it could increase costs for nearly all taxpayers. While there are additional arguments against adjusting the municipal tax exemption, the culmination of these factors indicates that such a significant change could alter what has served as one...

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Comments (3)
This commentary is and embarrasment. Not only is the history wrong, the logic is
Posted by maguire1 | Friday, April 12 2013 at 11:45AM ET
The commentary is correct on almost all fronts. The fact that you didn't check your post for spelling and grammar before sending it is an embarrassment.
Posted by Samuel B | Friday, April 19 2013 at 3:14PM ET
The point about how a 28% cap would shift the tax burden to local governments is a good one.

But something tells me that the affordability of infrastructure projects and new issue debt volume are driven more by the overall strength of the local economy and issuer rather than the level of interest rates. The Bond Buyer 20 index averaged almost 2% higher in 2000 than it did in 2012, but that did not keep issuers from selling $17 billion more in new money bonds than they did in 2012.
Posted by kaplad | Wednesday, April 24 2013 at 4:17PM ET
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A recent phenomenon is the emergence of bonds with shorter call protection as funding alternatives for municipalities. However, the shorter call protection also dampens the potential upside for investors, which in turn reduces the price they are willing to pay.

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