Tax-Advantaged

Theoretically, in a free-market society, the government is supposed to...stay out of the market. Aside from making sure that poison doesn’t end up in our water supply, or that rotten meat doesn’t end up on our plates, the government is supposed to act as a neutral observer of commerce.

However, that doesn’t always happen. Certain businesses end up getting a boost from the tax code. Hence the concept of tax advantage.

The best example might be the municipal bond market, which is generally exempt from federal taxation. This situation gives muni bonds a leg up versus competitors, like corporate debt securities. Another high-profile example includes the mortgage industry. A mortgage interest exception on federal income taxes gives homeownership a subtle advantage over renting.