The Supreme Court of the United States Released Opinion in Kentucky v. Davis
On Monday, May 19, 2008 the Supreme Court of the United States released its opinion in the case of Department of Revenue of the Finance and Administration Cabinet, Commonwealth of Kentucky v. George W. Davis (Kentucky v. Davis). The Court ruled that the Commonwealth of Kentucky’s practice of exempting from Kentucky state income tax interest on bonds issued by it or its political subdivisions but not bonds issued by other states or their political subdivisions does not violate the commerce clause of the United States Constitution. This 7-to-2 decision permits those in the municipal bond community to breathe a sigh of relief. A negative ruling would have, presumably, resulted in higher borrowing costs for the Commonwealth of Kentucky and its cities, counties and school districts.
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