One of the worst ideas to emerge from the fiscal cliff rumor mill is that both sides are open to taxing municipal bonds.
For one thing this would pretty much kill the ability of local governments to issue raise money (muni bonds tend to pay less than corporate ones and thus the tax break is how they sell themselves).
For another you have many retired people who invested in muni bonds to provide a tax free retirement income. Now they will face the prospect of that income being taxed.
One hopes they won’t resolve this damned silly problem in this damned silly way.