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Munis best value in fixed-income market despite threat

Q

As you mention in your article, “Munis Spared from ‘Fiscal Cliff’ Deal,” the tax exemption for munis was left intact. I do think, though, that we will eventually see a compromise somewhere between 28% and unlimited. The possibility gives me more to think about when trying to decide on future income sources.

E.R.,Texas

A

James A. Klotz responds:

Although you are correct that the administration or Congress may still attempt to cap the tax exemption on munis at 28%, municipal bonds would still provide the best value of all fixed-income markets. That’s why the municipal bond market is continuing to attract large inflows of investor dollars and prices are moving up despite this potential threat.

Jan 17, 2013

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