Between yields on us treasury bonds and municipal bonds

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Over the years, income tax rates have changed dramatically. In 1981, the highest tax rate was reduced from 70 percent to less than 40 percent.

What impact do you think this reduction had on the difference between yields on U.S Treasury bonds and municipal bonds?

During the last recession, if 2007-2009 income taxes stayed the same, however, municipal bonds paid higher interest rate than U.S Treasury and at the end of the recession the same interest rates as U.S. Treasury?

How would you explain it?

Reference no: EM131886432

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