Hines, James R.; Horton, Emily - National Bureau of Economic Research - 2024
Interest paid by U.S. state and local bonds is tax-exempt, making these bonds attractive to investors - though a tax … not subject to the interest deduction limitation, making banks preferred holders of tax-exempt debt. U.S. banks used tax …-exempt debt to reduce their tax liabilities by roughly 20% in the 1950s and 45% in the 1960s, rising to as much as 80% by the …