Among Obama’s tax hike proposals is removing the tax exemption on municipal bond interest for high income earners.
Leaving aside the important issues of how this would affect individual muni bond holders and whether it is right to tax something that has traditionally been tax free for good reason, this proposal is a punch in the gut to states and municipalities at a time when many are struggling to fund themselves. It would make muni bonds much less attractive to investors and, therefore, make it harder for states, municipalities, and school districts to raise funds. That Obama has now even made this a possibility harms states and localities as it puts a question mark of the valuation of muni bonds.
Concerning school districts, for all Obama’s talk about education, one could hardly come up with a more anti-public school proposal.
Fortunately, this proposal has about 0% chance of passage . . . at this time. But that Obama is even remotely willing to inflict such collateral damage on states, towns, and school districts in his relentless class warfare shows how radical, petty, and profoundly irresponsible the man is.