A proposed increase in the federal income tax rates may actually be viewed favorably by many mayors of cities because:

Question

Quizplus · Accepted Answer

An increase in federal income tax rates makes tax-exempt municipal bonds more attractive to investors seeking to minimize their tax burden. As demand for these bonds increases, their prices rise, leading to a decrease in their yields. This is beneficial for cities issuing these bonds as it lowers their borrowing costs.

A Proposed Increase in the Federal Income Tax Rates May