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Municipal Bond Yields: Whose Tax Rates Matter?

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  • Fortune, Peter

Abstract

Examines the New View of yield spreads between taxable and tax-exempt bonds, which argues that personal income taxes are irrelevant to the relationship between interest rates on tax-exempt and taxable bonds. Finds evidence that the implicit tax rate, adjusted for quality differences, is related to statutory personal income tax rates.

Suggested Citation

  • Fortune, Peter, 1988. "Municipal Bond Yields: Whose Tax Rates Matter?," National Tax Journal, National Tax Association;National Tax Journal, vol. 41(2), pages 219-233, June.
    • Handle: RePEc:ntj:journl:v:41:y:1988:i:2:p:219-33
    DOI: 10.1086/NTJ41788723
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    Cited by:

    1. Lovely, Mary E. & Wasylenko, Michael J., 1992. "State Taxation of Interest Income and Municipal Borrowing Costs," National Tax Journal, National Tax Association;National Tax Journal, vol. 45(1), pages 37-52, March.
    2. Lovely, Mary E. & Wasylenko, Michael J., 1992. "State Taxation of Interest Income and Municipal Borrowing Costs," National Tax Journal, National Tax Association, vol. 45(1), pages 37-52, March.
    3. Thomas Luke Spreen & Ed Gerrish, 2022. "Taxes and tax‐exempt bonds: A literature review," Journal of Economic Surveys, Wiley Blackwell, vol. 36(4), pages 767-808, September.
    4. N. Gregory Mankiw & James M. Poterba, 1996. "Stock Market Yields and the Pricing of Municipal Bonds," NBER Working Papers 5607, National Bureau of Economic Research, Inc.
    5. William J. Crowder & Mark E. Wohar, 1999. "The changing long‐run linkage between yields on Treasury and municipal bonds and the 1986 Tax Act," Review of Financial Economics, John Wiley & Sons, vol. 8(2), pages 101-119, September.
    6. Slemrod, Joel & Greimel, Timothy, 1999. "Did Steve Forbes scare the US municipal bond market?," Journal of Public Economics, Elsevier, vol. 74(1), pages 81-96, October.
    7. Graham, John R., 1999. "Do personal taxes affect corporate financing decisions?," Journal of Public Economics, Elsevier, vol. 73(2), pages 147-185, August.
    8. Simon, David P., 1996. "An empirical reconciliation of the Miller model and the generalized capital structure models," Journal of Banking & Finance, Elsevier, vol. 20(1), pages 41-56, January.
    9. Metcalf, Gilbert E., 1993. "Federal taxation and the supply of state debt," Journal of Public Economics, Elsevier, vol. 51(3), pages 269-285, July.
    10. Smith, Steven & Singleton, Ron, 2023. "Gold and tax capitalization: A natural experiment," Advances in accounting, Elsevier, vol. 62(C).
    11. Poterba, James M., 2002. "Taxation, risk-taking, and household portfolio behavior," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 17, pages 1109-1171, Elsevier.
    12. Kriz, Kenneth A., 2003. "Comparative costs of negotiated versus competitive bond sales: new evidence from state general obligation bonds," The Quarterly Review of Economics and Finance, Elsevier, vol. 43(2), pages 191-211.
    13. H. Youn Kim & Junsoo Lee & Stephen E. Lile & James R. Ramsey, 2000. "Municipal Bonds and Tax Arbitrage: A Cointegration Analysis," Public Finance Review, , vol. 28(4), pages 372-389, July.

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