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First off:
Investing in municipal bonds is perfectly legal and ethical. Any investor can buy them, though not all would want to. It is a very conservative strategy with very little "upside." Many people will choose to earn more, pay the tax on the extra income, and come out ahead in many cases.
Heinz-Kerry, however, probably feld she had had limited investment options. Many stocks and corporate bonds, for instance, would be hard to buy without an appearance of a conflict of interest for her husband.
She also probably is just a very, very risk-averse investor on principle. Not everybody is.
Second:
The system that allows people to buy muni bonds at low rates in exchange for not paying taxes on the income has served us well for generations. It's a system that has financed parks, roads, bridges, firehouses, police stations, and on and on - to the benefit of everyone. I can't believe that the GOP's hatred of Teresa Kerry is so extreme that they'd REALLY want to eliminate the tax-free status of municipal bonds (thus raising taxes everywhere) just to spite her.
So folks should just grow up. The Kerrys paid every dime they owed. End of story.
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