WASHINGTON - The municipal market has not yet warmed to taxable, tax-credit bonds for a number of reasons, but federal lawmakers are authorizing increasing amounts of them, most recently in the new stimulus law, to encourage the development of a market.

Proponents of tax-credit bonds, which provide investors with a tax credit in lieu of tax-exempt interest, claim that the tax credit provides a more efficient federal subsidy to state and local governments than tax-free interest payments. But critics and skeptics worry these bonds may be an attempt by Congress to undermine the tax-exempt market by pushing issuers into selling taxable debt.

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