Plans to tax munis won't fly, says BNY Mellon

Plans to tax munis won't fly, says BNY Mellon
Despite need to raise federal tax revenues, bank believes lawmakers will spare municipal debt
SEP 01, 2011
By  John Goff
Renewed proposals to eliminate the tax-exempt status of municipal bonds as a way to reduce the $1.5 trillion federal deficit are unlikely to succeed, said a report by BNY Mellon. Abolishing the asset class would drive up borrowing costs and further strain the budgets of muni issuers, leading to cuts in services and capital projects, according a report today by Standish Mellon Asset Management Company LLC, the fixed-income arm of the New York-based investment bank. A proposed budget submitted by Representative Paul Ryan, the House Budget Committee chairman, and a report from the Simpson-Bowles debt commission embraced by President Barack Obama in December 2010 both sought to eradicate the tax-exempt treatment of municipal bonds, the report said. “The urgent scramble to address the ballooning federal deficit will reasonably seek to uncover every scheme to broadly raise revenues, bringing all major tax expenditure loopholes under intense scrutiny,” wrote Steven Harvey, a senior portfolio manager, and Nathan Harris, a research analyst. “We believe it is unlikely that municipal entities will be penalized.” --Bloomberg News--

Latest News

Northern Trust names new West Region president for wealth
Northern Trust names new West Region president for wealth

The new regional leader brings nearly 25 years of experience as the firm seeks to tap a complex and evolving market.

Capital Group extends retirement plan services further with a focus on advisors
Capital Group extends retirement plan services further with a focus on advisors

The latest updates to its recordkeeping platform, including a solution originally developed for one large 20,000-advisor client, take aim at the small to medium-sized business space.

Why RIAs are the next growth frontier for annuities
Why RIAs are the next growth frontier for annuities

David Lau, founder and CEO of DPL Financial Partners, explains how the RIA boom and product innovation has fueled a slow-burn growth story in annuities.

Supreme Court slaps down challenge to IRS summons for Coinbase user data
Supreme Court slaps down challenge to IRS summons for Coinbase user data

Crypto investor argues the federal agency's probe, upheld by a federal appeals court, would "strip millions of Americans of meaningful privacy protections."

Houston-based RIA Americana Partners adds $1B+ with former Morgan Stanley director
Houston-based RIA Americana Partners adds $1B+ with former Morgan Stanley director

Meanwhile in Chicago, the wirehouse also lost another $454 million team as a group of defectors moved to Wells Fargo.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.