If taxes did not exist, would Treasury bonds offer a higher or lower yield than municipal bonds w/same maturit

Answer 1

lower yield. They are safer investments. The gov't could always just print more money, a state or city cannot.

Answer 2

If you were in a zero tax bracket and were choosing between investing in a municipal bond versus a treasury bond of the same maturity, you would generally do better buying the treasury bond.

You can verify this by checking out the relevant indices or particular bonds you are interested in.

Although treasury bonds have lower risk than municipal bonds, the municipal bonds have lower yield because they are not taxed at the federal level.

Given particular bonds and particular maturities there are exceptions, but generally a taxable treasury bond is going to have a higher yield than a tax-free municipal bond.

If you really mean to get an answer under the assumption that taxes did not exist, then there is no answer because the government bond market wouldn't exist either.

Answer 3

A lender requires a certain interest rate for a certain amount of risk. If taxes did not exist, then the yield must increase for the additional amount of risk.

Your question has to do with whether the federal government or the state government is more risky if each could not enforce taxes paid to them. I would say the federal government is more risky since they are father removed from the taxpayers.

Treasury bond must offer a higher yield to lender/investors.

Answer 4

Lower, as they couldn't afford to pay much interest with no tax revenue. What do you think a significant portion of your taxes go to pay for? Yep, the national debt!

Answer 5

if there were no taxes.there would be no treasury bonds...........how could they be paid back.......................................voluntary donations to gon't