With big infrastructure spending proposals and the possibility of higher taxes looming over the policy horizon, it’s only natural that municipal bonds would become a top-of-mind consideration for more investors. The reasons aren’t that complicated.
Given the unprecedented federal support to help fight the COVID-19 pandemic as well as the size and scope of the Biden administration’s trillion-dollar budget and infrastructure proposals, the prevailing market sentiment is that tax hikes are inevitable. President Biden is on record stating that taxes will go up for individuals who earn more than $400,000 a year. He also wants to raise the top tax bracket back to pre-Trump administration levels, from 37% back to 39.6%.
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1 “Trends in Municipal Bond Ownership,” Municipal Securities Rulemaking Board, 2021.
2 “How Much Each State Will Receive From the Coronavirus Relief Fund in the CARES Act,” Center on Budget and Policy Priorities, 3/26/20.
3 “New York Has Spent Almost None of the Rescue Aid It Pleaded For,” Bloomberg, 9/1/21.
4 “Inside Biden’s $4.5 Trillion Infrastructure Plan,” Smart Asset, 8/27/21.
5 Barclays Live, 8/31/21.
6 Moody’s, cumulative 5-year default rates (%), 1970-2020.
Past performance does not guarantee future results. Indices are unmanaged and are not available for direct investment.
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