The U.S. Supreme Court today ruled 7-2 that states may continue to exempt from state income taxes interest on municipal bonds issued within the state, while taxing interest on out-of-state bonds.
Since the decision in Department of Revenue of Kentucky v. Davis (Case No. 06-666) was the one the municipal bond industry was hoping for and expecting, the whole industry breathed a sigh of relief. Experts had said a ruling the other way might have destabilized the market for muni bonds, which are vital to school districts and other local government agencies.
Bloomberg News reports here, and the Associated Press reports here.
In another decision on Monday, the justices upheld a federal law that deals with pandering or solicitation of child pornography.
In United States v. Williams (No. 06-694), the court ruled 7-2 that a 2003 law that was Congress’ latest effort to combat child pornography was not unconstitionally overbroad or too vague. The AP reports here.