Municipal bonds are issued by states and municipalities and typically have tax advantages relative to other fixed income assets. In general, income from muni bonds is tax exempt at the federal level and at the state level for investors living in the issuing state. Municipal bonds have historically been favored by investors in high tax brackets who, of course, derive more benefit from the tax exemptions by virtue of being in the highest tax brackets. Continue reading
There is no question that the promises made by state government pension plans are a major challenge to the future financial health of U.S. states. Many states pensions are already dramatically under-funded. A recent study suggests that the aggregate under-funding in state budgets, including pensions, is over $4 trillion. A 2010 analysis, the definitive research to date, finds that the unfunded state pension promises amount to $2.5 trillion.
What do these kinds of numbers really mean in practical terms? Continue reading