How is the municipal market prepared
for a potential tax reform?

May 1, 2017 / by Sean Carney

Mar 31, 2017

After the U.S. presidential election in November 2016, the municipal markets quickly priced in the potential for tax reform. As reform remains uncertain, the impact may not be as substantial as originally expected.

Discover more reasons why investing in municipals may make sense.

  • View transcript

    Sean Carney
    Head of Municipal Strategy

    Q: How is the market prepared for a potential tax reform?

    I think, immediately after the election, markets were very quick to price in potential fiscal and tax reform. But now that we and the markets have had the time to digest the facts, it seems may be a little less impactful. Our base case is that the Muni tax exemption is not at risk of going away. However, the value of that exemption could be diminished under this administration. Whether it is to the bringing down of the top marginal tax rate to 33% or a potential cap on the market. Either change could move markets. But we believe there is a good argument to be made that the concession that munis have put in post-election would be enough or close to enough to mitigate much of the market movement.

     


MAMTX
Strategic Municipal Opportunities Fund
The fund is a flexible, all-in-one municipal strategy that seeks to provide attractive tax-advantaged income and returns through diverse interest rate environments.
Sean Carney
Head of Municipal Strategy
Sean Carney, Director, is the Head of Municipal Strategy within BlackRock’s Global Fixed Income Group.