The Supreme Court recently heard a case involving muni bonds. What is it about?
A. Whether muni bonds can be subject to the alternative minimum tax B. Whether a state can tax interest on most out-of-state muni bonds while exempting interest on its own C. Whether muni bonds may “guarantee” returns to out-of-state investors ANSWER: B. The justices were asked to reverse a Kentucky court ruling that said the state couldn’t favor its own bonds, in a case being closely watched by other states with similar laws. The argument largely comes down to whether munis are akin to milk — or trash. The lawyer challenging the Kentucky law argued that preferential treatment is unconstitutional because the court has ruled that states cannot put up protectionist barriers around their dairy industries. But Kentucky’s lawyer cited a ruling that allowed two New York counties to discriminate on their own behalf by requiring trash haulers to deliver waste to publicly owned disposal facilities when cheaper private-sector alternatives existed.
