Monday, November 05, 2007

Supreme Court Hears Oral Arguments in Kentucky v. Davis Municipal Bond Case

The Supreme Court heard oral arguments today in the Commonwealth of Kentucky vs. Davis municipal bond case today. Media reports indicate the justices are leaning towards not disrupting a state's right to tax out of state municipal bond interest. According to The Wall Street Journal:
Justice David Souter was also critical of the challenge and worried aloud about disrupting the municipal bond market. "We have an enormous market, the effect of interrupting which we really as a court cannot tell very much (emphasis added)," Justice Souter said.
Bloomberg led with a story, Muni Bond Tax Breaks Get Support From U.S. Justices. In the article it was noted that:
Samuel Alito questioned whether states should be allowed to give special tax breaks on bonds that finance private construction, rather than a government project. So-called private activity bonds finance mortgages, student loans, small-scale industrial projects and redevelopments.
The bond market will certainly be on the edge awaiting a decision from the Court.

Supreme Court Hears Challenge To Muni-Bond Tax Exemption
The Wall Street Journal Online
By: Mark H. Anderson
November 5, 2007

Muni Bond Tax Breaks Get Support From U.S. Justices
By: Greg Stohr
November 5, 2007

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