State Taxation of Interest Income and Municipal Borrowing Costs

Mary Lovely and Michael J. Wasylenko

National Tax Journal, 1992, vol. 45, issue 1, 37-52

Abstract: This study uses a sample of individual municipal bonds to estimate the effect of state exemption of municipal bond interest income on the yield to maturity offered by public issuers to finance their debt. A state by state comparison of interest savings to estimated revenue loss on a hypothetical $1 million serial bond suggests that aggregate savings are achieved by an exemption policy only if more than half of state debt is held by nonresidents.

Date: 1992
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Persistent link: https://EconPapers.repec.org/RePEc:ntj:journl:v:45:y:1992:i:1:p:37-52

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