How's this for a sneaky tax increase move? Obama "jobs" bill contains a retroactive tax on municipal bonds.
The proposed jobs bill would cap municipal bond tax exemptions, which are currently 100 percent tax-free at the federal level. Americans in the top tax bracket would pay 7 percent on any income that would have otherwise been tax-exempt, including municipal bonds. If the Bush tax cuts expire at the end of 2012, the maximum tax on municipal earnings would be even higher: 11.6 percent
Additionally, the proposal would affect previously purchased tax-exempt bonds — creating a retroactive tax increase.
When news on this gets out, expect quite a dip in the muni market, especially given that the bond market overall looks weak anyway and many municipalities are on the financial edge. You really have to be insane to own a long-term muni right now.
wow, this is big news. surprised I haven't heard this yet.
ReplyDeleteThe sacred is no longer sacred
ReplyDeleteAre these people insane? The threat of retractive taxation is a good way to ensure people think twice before investing in anything. I wonder if they are sitting around thinking, "What are the ways we can kill the economy?"
ReplyDeleteThis is a hard one because making this income fully taxable stops the Federal government from subsidizing local governments and making it easier for them to issue debt. I am always amazed that when people talk about the debt of our country to GDP, they never include muni-debt which if they did makes us look more like Greece form a ratio stand point.
ReplyDeleteIt was always my understanding that munis were tax free in exchange for local govts not charging the fed govt property tax on their buildings.
ReplyDeleteCorrection - making this fully taxable will prevent higher income people from going into munis - which then will necessitate more federal aid to local governments. The noose just keeps getting tighter...
ReplyDeleteYou also have to be insane to be a president willing to cut all the states off at the knees when they are most vulnerable. Maybe next he'll stop allowing deductions for donations to charitable organizations.
ReplyDeleteJust exactly what the thousands of cities that are in fiancial trouble do not need right now. Who is Obamas financial advisor anyway, Satan?
ReplyDeleteIt's all part of a plan to destabilize the country so martial law can be imposed to quell the protests and rebellions. Once the people are scared, it's easy for them to demand law and order. The only way to defuse this is to co-op the police and military by exposing who they are and where they live. The ones with families will be the easiest.
ReplyDeleteI guess he either A) doesn't understand that a higher tax rate has hurt every country by taking productive funds & giving it to the inherently unproductive, or B) he's doing the best he can to destroy what's left of our once great nation.
ReplyDeleteAnd, if he's trying to rob from the citizenry to give to the government, why not go all the way. I think the retroactive portion is the scariest part of the whole thing. When will this MADNESS end?!
Hidden traps in the Kenyan's job bill the same with his Health Care Act - this guy is determined to upend this country!
ReplyDeleteObama is a SOCIALIST who happens to be Black.
ReplyDeleteCain in a FREE INTERPRISE guy who happens to be Black. Most Americans are free interprise people--so lets get rid of Obama