On Aug. 19, I asked readers if they would buy state and local government debt if municipal bonds weren’t tax exempt. Many readers said they wouldn’t but two recommended an alternative: taxing the municipal bonds that benefit private businesses such as sports arenas.
The Congressional Budget Office looked at that proposal too (it’s option #38 of 66) and, according to the study, eliminating tax-exempt private-activity bonds would add $23 billion to federal government coffers between 2010 and 2019, or $3.2 billion more than eliminating the tax exemption on all munis.
But these projects aren’t all about football stadiums. They also include money for airports, docks, mass transit, universities and hospitals. With that in mind, what’s your take on this proposal?