Perspectives Blog

The taxman cometh

James Dearborn, Head of Municipal Bonds | March 13, 2014

New and higher taxes will increase what many owe Muni bonds can help mitigate your tax bill Muni yields are attractive vs. many other investment options With tax season fully upon us, many Americans are about to realize the harsh realities of the new tax environment that came into effect January 2013 with the passage of the oddly named American Taxpayer Relief Act of 2012 and the introduction of taxes associated with the Affordable Care Act (A…

What’s the outlook for muni bonds?

James Dearborn, Head of Municipal Bonds | June 19, 2014

…ned considerably in recent months and we see no signs that investor appetite for tax-free income will abate. New taxes and higher tax rates implemented last year have ignited a fierce interest in municipal bonds, as investors’ antipathy to taxes remains palpable. This demand is fueling flows into mutual funds and individual bonds, providing a positive support for bond prices. This marked supply/demand imbalance that pushed up prices earlier this…

Compelling opportunity in municipal bonds

Catherine Stienstra, Senior Portfolio Manager | November 7, 2013

…ve basis. Municipal bonds are one of the remaining investments that allow investors to shelter their income from taxes. With the highest federal tax rate at 43.4%, plus state taxes, the savings provided by municipal bonds can be considerable. It is what you keep that is important. Sources: Thomson Municipal Market Data (MMD), Bloomberg BVAL, 09/30/13 **Assumes 2013 federal income tax rate 43.4% (39.6% income tax rate + 3.8% net investment incom…

New taxes require strategies to maximize after-tax return

Abram Claude, Vice President, Columbia Management Learning Center | March 18, 2014

Higher earners with taxable investments are most susceptible to triggering the net investment income tax, a surtax of 3.8% that applies to taxable investments. An asset location strategy involves placing a greater percentage of the most tax-sensitive investments in tax-deferred accounts. Retirement plans offer significant opportunities for participants and business owners to reduce taxable income. In 2013, new taxes associated with the Afforda…

The case for active muni management

Kimberly Campbell, Senior Portfolio Manager | April 21, 2014

…tive for investors in high tax brackets Recently, the advantages of municipal bonds have become more apparent as taxes have increased for many investors, new taxes have emerged and taxable-equivalent yields are higher than they were a year ago. Many high tax bracket investors are keeping less than half of their income after paying the highest federal tax rate of 43.4% (which includes the new 3.8% Net Investment Income Tax) in addition to possible…

Death, taxes and Medicaid expansion

Harlan Sonderling, CFA, Senior Healthcare Analyst | September 8, 2014

Almost as certain as death and taxes is Medicaid expansion under ACA and the move by states toward Medicaid managed care and away from traditional fee-for-service. Medicaid managed care enrollment will expand as states transition beneficiaries from fee-for-service coverage to managed care and the “opt-in” states broaden eligibility. Medicaid coverage expansion will be a source of accelerating revenue and earnings within the managed care industr…

Capture five tax benefits with a 529 college savings plan

Columbia Management, Investment Team | March 21, 2014

By contributing to a 529 plan, you may benefit from tax advantages — without giving up control of plan assets. As an estate planning tool, 529 plans may allow removal of significant assets from your taxable estate. Investment growth in a 529 plan, as well as distributions, is not subject to the new 3.8% net investment income surtax. Owning a home. A financially secure retirement. A college education for a child or grandchild. These are a…