7. If enacted, would the tax bill stand in the way of your starting a portfolio
in Municipal Bonds or adding to your holdings (so long as your total tax-free
income there from does not exceed the $10,000 allowance?)

56% OF THOSE WHO ANSWERED YES OR NO WOULD NOT BE WILLING
TO BUY MUNICIPAL BONDS EVEN THOUGH THEY WERE NOT
PERSONALLY AFFECTED BY THE TAX BILL.

8.

Suppose you do reach the point, or are at the point, where you are getting
$10,000 a year from tax exempts and your tax-free income does amount to 50%
of your total income, would you be willing to buy more Municipal Bonds as long
as there is a yield advantage to you in doing so?

229 Say they would be unwilling to buy more Municipal Bonds

Don't know

222

Are willing to buy

214

35

No answer

52% OF THOSE WHO ANSWERED YES OR NO WOULD NOT BE WILLING
TO ADD TO HOLDINGS ONCE HAVING REACH POINT WHERE
REQUIRED EITHER TO ALLOCATE DEDUCTIONS OR PAY SOME
TAX ON MUNICIPALS.

33-865 69 - 77 (pt. 4)

9.

Suppose some of our towns do come out with a fully taxable bond in exchange for a federal interest subsidy. In your opinion, what is the minimum rate the municipalities below would have to pay on a fully taxable bond, when you can get 5% from a savings bank, 6-6 1/2% from various tax free Municipal Bonds, 7 3/4% from a U.S. Government note, 8.20% from an indirect U.S. Government obligation, 8-8 1/2% from various corporates, and over 9% from foreign securities?

AVERAGE ACCEPTABLE RATE 10-11%, WITH 43% SAYING
WOULD NOT BUY AT LESS THAN 10% IF AT ANY PRICE

AVERAGE ACCEPTABLE RATE 9-10% WITH 51% SAYING
WOULD NOT BUY AT LESS THAN 10% IF AT ANY PRICE

AVERAGE ACCEPTABLE RATE 10-11% WITH 69% SAYING
WOULD NOT BUY AT LESS THAN 10% IF AT ANY PRICE

*Including "not at any price"

10. From the standpoint of Moody's rating, or just your own peace of mind, what is the least desirable municipality in your portfolio?

181 OWNERS INDICATED THAT NEW YORK CITY BONDS WERE THEIR BIGGEST WORRY.

11.

What interest rate would it take on a fully taxable bond of this issuer for you to buy such a bond again?

AVERAGE ACCEPTABLE RATE 9-10%, WITH 51% SAYING THEY
WOULD NOT REBUY PRESENT HOLDINGS AS TAXABLE BONDS
AT LESS THAN 10% IF AT ANY PRICE AT ALL.

CONCLUSION: COST OF BORROWING THROUGH THE DEVICE OF TAXABLE
MUNICIPAL BONDS WITH FEDERAL INTEREST SUBSIDY WOULD BE
PROHIBITIVE FOR THOSE MUNICIPALITIES IN WHICH INVESTORS FEEL
LEAST CONFIDENCE--NAMELY, THE SMALL NON-RATED TOWNS AND THE
BIG CITIES WITH THE TOUGH PROBLEMS--ALTHOUGH INVESTORS ARE
WILLING TO BUY SUCH BONDS AS TAX EXEMPT ISSUES.

12. Where do you stand on the tax bill as it pertains to Municipal Bonds?

111 Say they are for the bill

614 Against

65 No answer

770 Total

87% REPORTING POINT OF VIEW ARE AGAINST TAX BILL AS IT

PERTAINS TO MUNICIPAL BONDS.

*Including "not at any price"

CONCLUSION

You would expect owners of Municipal Bonds to oppose a tax on Municipal Bonds because it hurts them personally and is inimical to self-interest.

In point of fact, the sections in H.R. 13270 having to do with Municipal Bonds affect few investors directly. 28% might have to allocate deductions. 5% might additionally have to pay some tax on their Municipal Bonds.

And yet, more than 50% of the individuals surveyed indicated that they would not be willing to invest in Municipal Bonds if the proposed bill goes through, apparently sensing that a tax on one man's Municipal Bonds changes the nature of the security for all.

As for fully taxable Municipal Bonds, issued by the community with a federal interest subsidy, present investors in Municipal Bonds show no enthusiasm for such instruments at rates less than 10%. Many investors who have been willing to own the bonds of small towns and the big cities with the tough problems as tax-free bonds, indicate they would not rebuy such bonds as taxable issues at any price at all.

Conclusion: Tax one Municipal Bond--even just a little--and it's goodbye to a substantial segment of the market for Municipal Bonds, not to mention the relatively low cost of borrowing for every town, city, and State in the Union.