Donald Trump's presidential victory and the Republican-controlled Congress set the stage for historic tax reform that has the potential to jeopardize the tax exemption for municipal bonds, according to market participants.

Both Trump and Republicans are pushing for tax reform plans that would lower individual and corporate tax rates and broaden the tax base, repealing or restricting tax deductions and exemptions.

Charlie Henck, a partner with Ballard Spahr, said it's a given that the tax exemption for municipal bonds will be on the table during the tax reform debate. "In the years I've been watching Congress and all of the new administrations, you can take it as a given that the economic folks at the Treasury Department and the Joint Committee on Taxation will put the tax exemption for munis on their hit list," Henck said. "It's generally thought by those folks to be an inefficient incentive."

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