President Obama proposed this week still another way to stick it to “the man”. He wants municipal bond interest to be taxable to investors who earn more than $250,000 annually. What a great concept on the surface. The pool of buyers of muni bonds is relatively small. They typically are savers who depend on the income, or investors who use them as a tool to offset stock risk. The owners of muni bonds have traditionally been America’s wealthiest investors. Anyway, muni bonds are loans to local governments to build roads and schools and water systems, etc. The interest earned on these bonds has been tax-free for over a hundred years.
Political leaders demonstrate a remarkable lack of understanding in the way decisions are made, and how rules are linked, when they propose capricious solutions like this.