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tax exemption and public vs private goods

Does the federal income tax exemption of interest on state-local government mask cost of state-local projects and thus encourage spending for "private rather than "public" goods? Please explain the arguemenet for and against this critisism. thanks.

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Hello,

I believe that your question switched around 'private' with 'public' goods. This is similar to the question "Does federal tax exemption of interest income from state and local government bonds encourage state and local government borrowing?". The arguement for this follows: What do state and local governments do with the funds they borrow at below ...

Solution Summary

I believe that your question switched around 'private' with 'public' goods. This is similar to the question "Does federal tax exemption of interest income from state and local government bonds encourage state and local government borrowing?". The arguement for this follows: ........

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