Duration: 2:24
Transcript: If we have an exemption that goes away, Municipalities would have to compete against say corporate bonds as an example.
We’ve been asked a lot about tax exemption on municipal bonds. Specifically, is the federal tax exemption going to be effectively done away with? And there’s a lot of people out there and a lot of investors out there that are concerned about this.
We’ve been trading municipal bonds for over 30 years. We have people on our team that have been trading bonds for over 45 years.
So personally, I’ve seen this issue come up during each change of administration. No matter who comes in the office, it always comes up. And it’s it’s a talking point. So from a talking point standpoint, the reason that the likelihood of it not happening, in other words, the exemption continuing is because if we have an exemption that goes away, municipalities would have to compete against say corporate bonds as an example.
So therefore, instead of issuing bonds at say 4% or 3.5% or whatever the number is, they would have to issue bonds at higher rates. And I’m not gonna determine what those higher rates are, but at the end of the day, they would definitely have to issue bonds at higher rates. What does that really mean? The constituents of those municipalities, the taxpayers like you, the investor, you’re gonna be paying more in taxes.
Not to mention the fact of how all of the bonds in the past have been, you know, going to be treated as far as if they take the tax exemption away, what’s gonna happen to the bonds you own currently? It’s too complicated of an issue to address by the local governments and by the federal governments. We believe along with many other people, the tax exemption will continue to stay in place. I wouldn’t be too terribly concerned about it. Talk to your tax accounts if you should, but at the end of the day, we believe that the tax exemption will indeed stay in place. There’s too much complications surrounding this issue for it to be repealed.
