If Taxes Go Higher, Demand for Municipals Will Also Rise
States such as New Jersey, California, and New York have been considering taxes on the wealthy to help close budget gaps.
Demand for municipal bonds has been strong since the Tax Cuts and Jobs Act of 2017, and that demand has continued in recent months. This week, investors added another $2.3 billion to municipal mutual funds. This was the 14th consecutive week of positive flows where investors have in total allocated $21.4 billion into municipal funds.
We expect demand for tax-exempt municipal bonds will rise if or when taxes go higher.