Heather Gillers
speaker
548 appearances
11 recordings
1 series
first heard Nov 2018
last heard Oct 2021
Heather Gillers’s voice in public audio — every appearance, attributed to the second.
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Appearances
So all of a sudden,
state and local tax bills became much more burdensome, particularly for wealthier people in high tax states.
And those people started looking for a place where they could get tax relief.
And one of the only places really is municipal bonds.
Municipal bonds throw off interest that is exempt not only from federal taxes, but also from state taxes in the state where those bonds are issued.
The tax law has really reshaped the municipal market in a number of ways.
For municipalities, what happened was they were no longer allowed to do certain types of refinancing, early refinancing deals.
That's where the municipality issues a bond to pay back an outstanding bond with the hope that it will cut their interest costs.
Usually they do that when interest rates have fallen, sort of like you might refinance your home mortgage.
So that was a pretty robust source of municipal bonds in the market were these early refinancings.
And those were eliminated by the federal government in the 2017 tax overhaul.
It was a moneymaker for the federal government because previously the federal government was not allowed to collect taxes on the interest on taxes.
these refinancing bonds.
So what would happen is you would have two sets of bonds throwing off tax exempt interest for the same debt.
And so by ending the use of the tax exemption for these early refinancings, the federal government could collect more taxes or at least avoid giving so many tax breaks.
But for municipalities,
That meant fewer bond issuances.
And the end result has been to limit the flow of bonds into the municipal market more than in the past.
And furthermore, to drain tax exempt bonds further.
from the municipal market because rates are currently so low that some municipalities are deciding to go forward with these early refinancings, even though they can't use the tax exemption anymore.
Showing 301–320 of 548 · page 16 of 28
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