Municipal Bond Forum
Divining the intent of Congress
Q
If existing tax-free municipal bonds eventually become taxable by the actions of Congress, would bondholders have legal recourse?
A
James A. Klotz responds:
This is a legal question and doesn’t fall into our area of expertise. However, most discussions we’ve heard have entailed a less direct threat to tax exemption. All proposals with which we are familiar, posing a direct threat to tax exemption, have not been offered as retroactive. More prevalent are plans that either limit the tax exemption of munis or cap overall deductions.
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