On Monday, the Supreme Court ruled that states may offer special tax breaks to residents for investing in municipal bonds issued by them and local governments within the state. The 7-2 decision, in Kentucky Department of Revenue v. Davis was widely expected. But even if the Court wanted to bar states from preferring their own bonds over those from other jurisdictions, the current troubles of the $2.6 trillion municipal bond market probably made that impossible.    more »

While TaxVox and others have disclosed the folly of a federal tax holiday, some have suggested that temporary state gas tax relief might work better. Some New York State legislators are already pushing for such a plan. But before cash-strapped states jump on the bandwagon, they might consider how a previous experiment in Illinois and Indiana worked out. In 2000, Indiana announced that it would be suspending its 5 percent gasoline sales tax for 120 days beginning July 1. In response, Illinois also suspended its levy for six months that July.. Quaint as it seems today, the changes were spurred by a spring spike in Midwest gas prices to (gasp) $2.00 – a level drivers would now gladly embrace.    more »