Skip to content
Subscriber Only

Supercommittee May Take Up Obama’s Threat to Muni-Bond Tax Break

Congress’s deficit-cutting supercommittee may cap or end a tax exemption that helps set state and local debt prices, raising borrowing costs and disrupting the $2.9 trillion municipal-bond market.

Bankers, bondholders and issuers are preparing for an attack on the tax break investors get for interest earned on some municipal securities, already targeted by President Barack Obama in his jobs and deficit-reduction proposals. The exemption, which has never been cut, lowers the cost of loans for schools, highways, hospitals and other public works.