Will Tax Reform Re-Form the Muni Market? - Context

There’s a wide range of possibilities that could be proposed or enacted when it comes to taxes. But here’s what we do know: even if Congress cuts the top tax rate to 33% or decides to tax investment income at half that rate, munis would still offer more yield after taxes than Treasuries (though less than they’ve offered historically).

What does the market think will happen? Not a lot. It’s pricing in a modest reduction in the top tax rate and a low probability of dramatic change.

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