Municipal bonds SCOTUS case
 

Sorry for the extra thread, but I plan on shipping this to BFI after we're done with it.

This case is making a lot of people nervous in financial circles to the point that the argument is being made that the issue is too important to be left to the courts (a "political question") and that the Court should stay out of it.

Typically, municipal bonds are not subject to state taxes if a resident buys the bond from his home state, but they are taxed if bonds are from a municipality in another state. The Supreme Court will examine if this violates the 14th Amendment's Equal Protection clause and the Commerce Clause. This case is shaping up to have a huge impact on the $2 trillion dollar municipal bond market.

My take on this is that the Supreme Court will vote to forbid interstate only taxes. Interstate sales taxes have already been ruled a commerce clause violation and the commerce clause has been consistently held to forbid barriers to interstate commerce.

Re: Municipal bonds SCOTUS case
 

So a New Yorked could buy a NJ bond without tax.

Sounds like a huge win for some municipalities. This might be worth looking at.

Re: Municipal bonds SCOTUS case
 

I agree with iron. I think there are some plausible arguments in favor of taxing bonds this way, but the overall effect has to be to fragment the municipal bond market along state lines, which is exactly what the CC was intended to prevent.

Re: Municipal bonds SCOTUS case
 

Bump.

Re: Municipal bonds SCOTUS case
 

Right, but most muni bonds are purchased by investment funds who have already circumvented theses restrictions. You can sign up at Fidelity.com
Not really relevant.

Re: Municipal bonds SCOTUS case
 

What are the implications of this for someone who already owns a bunch of municipal bonds in their own state?

Also, what are the implications of the tax exempt free fund families at Vanguard where some states earn slightly lower 0.1 - 0.2 % than others.