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Muni arb is a relative value strategy that seizes upon an inefficiency that is related to government tax policy; interest on municipal bonds is exempt from federal income tax. [1] [2] Because the source of this arbitrage is artificially imposed by government regulation, it has persisted (i.e., it has not been "arbed away") for decades. [3]
3. Series I bonds and EE bonds. While not as tax-friendly as municipal bonds, Series I bonds and EE bonds offer some attractive tax advantages. The interest earned is typically free from state and ...
Since the 1970s, the following factors have led local governments (cities, townships, etc.) to consider tax increment financing: lobbying by developers, a reduction in federal funding for redevelopment-related activities (including spending increases), restrictions on municipal bonds (which are tax-exempt bonds), the transfer of urban policy to ...
IRBs are desired as the private business receives a lower interest rate (due to the bonds tax-exempt status), a property tax exemption, and a long-term, fixed rate financing package. [ 1 ] Bond proceeds may be used for a variety of purposes, including land acquisition, building construction, machinery and equipment, real estate development fees ...
For example, assume an investor in the 38% tax bracket is offered a municipal bond that has a tax-exempt yield of 1.0%. Using the formula above, the municipal bond's taxable equivalent yield is 1.6% (0.01/(1-0.38) = 0.016) - a figure which can be fairly compared to yields on taxable investments such as corporate or U.S. Treasury bonds for ...
The existing supermajority requirement for local bond approval goes back to the series of tax restrictions in California's Constitution inaugurated by the passage of Proposition 13 in 1978.
It’s important for both residents and businesses to understand California’s state income tax brackets and how ... ranging from 1% to 12.3% tax rates. ... Tax Rate. Tax Owed. $0 to $21,512. 1%.
(1) the private business use test of section 141(b)(1) and the private security or payment test of section 141(b)(2), or (2) the private loan financing test of § 141(c). Under Treasury Regulation section 1.141-2, an interest on a private activity bond is not excludable from gross income under section 103(a) of the Internal Revenue Code unless ...