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Q

Regarding your article, “Munis Spared from ‘Fiscal Cliff’ Deal“: You know, sometimes it pays to not gloat and leave gift horses unexamined! You are writing to the choir and the unevenly blessed and perhaps not deserving of the largesse we enjoy. Maybe if you spoke more of “put back” or “share,” the backlash won’t be as harsh as it could or should be.

A

James A. Klotz responds:

Your point is well taken.

It certainly was not our intention to gloat. Our goal was to inform investors that the danger of municipal bonds losing some or all of their tax-exempt status had been averted – a subject that has drawn a great deal of attention recently among community leaders responsible for funding public works projects and investors alike.

The focus of our article and, in all likelihood, a key reason why the exemption was left untouched, was the benefits munis provide to the community at large. While the tax exemption is certainly attractive to the privileged, it is important to note that more than 75% of the $3.7 trillion outstanding municipal bonds are owned either directly or indirectly (through mutual funds) by individuals, and a good portion of them are not in the “super rich” category. To these individuals, the income derived from their bonds is of vital concern either for daily living or retirement.

As a municipal bondholder yourself, we wouldn’t want you to overlook your contribution to the “put back” of supporting education and other essential services.

We think if both sides of the equation were more fully understood by the public, there would be no backlash, harsh or otherwise.