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Private Activities Favored by Municipalities Continue to Receive Tax-Exempt Financing  

Author:  Joan Teresa Kay.

Source: Volume 26, Number 01, Fall 2008 , pp.74-96(23)

Journal of Taxation of Investments

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This article reviews Government Accountability Office report GAO-08-364 (February 2008) regarding tax-exempt bonds: The volume of tax-exempt governmental and private activity bonds issued has reached historically high levels. The volume of new money bond issues has been greater than bonds refunding issuances. The volume of tax-exempt bonds issued, particularly bonds issued for refunding, tends to be highest when interest rates decline. Because of the tax exemption for investors, federal revenue losses amount to billions of dollars annually. Though not as large as the increase for governmental bonds, there has been a significant increase in the amount of qualified private activity bonds issued since 2002. Bonds issued on a competitive basis will likely have lower interest costs than bonds sold on a negotiated basis.


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