Editing Municipal bond (section)

==Statutory regulation ==
The U.S. Supreme Court held in ''[[Pollock v. Farmers' Loan & Trust Co.]]'' (1895) that the federal government had no power under the U.S. Constitution to tax interest on municipal bonds,<ref>{{ussc|name=Pollock v. Farmers' Loan & Trust Co.|volume=157|page=429|year=1895}}</ref> but in ''[[South Carolina v. Baker]]'' (1988), the Supreme Court held the Congress could tax interest income on municipal bonds if it so desired on the basis that tax exemption of municipal bonds is not protected by the Constitution.<ref>{{ussc|name=South Carolina v. Baker|volume=485|page=505|year=1988}}</ref> In this case, the Supreme Court stated that the contrary decision of the Court in ''Pollock'' had been "effectively overruled by subsequent case law".

The [[Revenue Act of 1913]] first codified exemption of interest on municipal bonds from federal income tax.

The [[Tax Reform Act of 1986]] greatly reduced private activities that may be financed with tax-exempt bond proceeds.