The midterm election outcome could affect the municipal bond market, especially at the state level, where several ballot measures would change tax laws. Blue states are pursuing graduated income taxes on high earners, while red states are cutting property taxes, and California's proposed one-time levy would equal 5% of the wealth of taxpayers with at least $1 billion in assets. Dan Close of Nuveen said tax increases would make the muni tax exemption more valuable and could push bond prices higher as investors seek shelter, while Florida's proposal would raise a property tax exemption that does not apply to school taxes to $150,000 in 2027 and $250,000 by 2028. Municipal bond issuance totaled $473.8 billion through September, up 7.8% from a year earlier, and Schwab's Cooper Howard views supply as the biggest issue coming out of the election.
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Original headline: The midterm election could reshape the muni bond market. Here’s what investors need to know
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