Share
Explore BrainMass

federal tax exemption of interest on state-local debt

Is the federal income tax exemption of interest on state-local debt an inefficient subsidy in terms of "transfer efficiency"? What are the arguements for and against it being an ineffiecient subsidy in terms of "transfer efficiency"? thank you.

Solution Preview

Hello,

The arguement for inefficiency is that state and local governments must go through the vagueries of the market to get the funds they need to pay for capital projects to maintain or improve basic infrastructure. They must also pay back this debt, making this method more ...

Solution Summary

federal income tax exemption of interest on state-local debt/ bonds

$2.19