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| BondsOnline.com: instant access to and extensive coverage of over 3.5 million stocks, bonds, indexes and other securities covering major and emerging markets and exchanges across the globe. |
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| Bonds Online |
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| 5/10/2013Market Performance |
| Municipal Bonds |
|---|
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S&P National Bond Index
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3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
|
0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| More |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
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636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
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1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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Muni Tax-Exemption Tweak Is Idea Whose Time Hasn’t Come: View |
REUTERS - Sept. 19, 2011 - By the Editors
We’ve argued that the notoriously convoluted U.S. tax code requires a comprehensive overhaul that would phase out distortions. But discrete tweaks to the system can and often do create more problems than they solve.
President Barack Obama’s proposal to reduce the exemption that high earners can claim on interest for their municipal-bond investments is a good example: It should be rejected on the grounds that it only makes sense as part of a sweeping reform.
Politicians have been trying to kill the special tax status of muni bonds since Andrew Mellon was Treasury secretary almost 100 years ago. But there are a few good reasons the federal government has wanted to keep the exemption: State and local governments are a (rightly) powerful constituency; capital markets are the most efficient way to match investors with local infrastructure needs, and should be encouraged; and municipal projects tend to be in the public interest.
The administration justifies the measure -- one of several intended to pay for the $447 billion American Jobs Act -- as a means of getting the rich to kick in their “fair share.” It’s true that higher earners are the greatest beneficiaries of this tax benefit. But significantly limiting the exemption would probably cause collateral damage in the long run by driving up interest rates for municipalities to borrow. That would mean higher taxes, more expensive services and a lower propensity for local governments to undertake capital projects.
In other words, it won’t just be “millionaires and billionaires” footing the bill -- it will be everyone.
Effect on Market
How disruptive would this new tax, which the administration estimates will bring in $30 billion a year, be for the muni market? A report from Morgan Stanley Research saw little impact, pointing out that the premiums investors demand to hold munis over Treasuries “have little direct relationship with tax rates historically.” A report from Citigroup Global Markets, by contrast, argued that curbing the exemption would “increase state and local borrowing costs significantly.” On balance, we suspect the impact on interest rates will be relatively small initially. (Certainly the proposal has had little effect on the market since the announcement, according to Bloomberg pricing data.) Of course, that could change rapidly if historically low Treasury yields rise and munis start to look less attractive.
For the complete article.
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| Stuff to look at |
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S&P Commentary and Newsletters: S&P
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| BondsOnline Advisor |
Income Security Recommendation January 2013 Issue.
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