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Arguements in favor of elimination of federal taxes on interest received from treasury debt obligations The biggest benefit of this is that it will increase the investment in treasury debt from general public. Treasury debts will be oversubscribed and fiduciary will have more funds to manage the economy. It will encorage savings habit of general public due to tax incentive. Authorities will have extra funds with which they can finance the infrastucture projects or any other projects which is of priority to the economy. Arguements against elimination of federal taxes on interest received from treasury debt obligations Federal taxes on interest on treasury debt represents income to the fiduciary. Eliminating the same will mean that authorities will lose such income. It will create a significant gap between private debt and public debt as private debt will continue to attract the federal taxes. Excess availability of funds might lead to state investing in a project which might not be of immediate priority. It will increase the disparity between rich and poor. Rich people with excess cash will invest in tax fee debts and will earn more income with no taxes and will become richer. Conclusion This proposal can not be a long term solution for the US treasury , however it can be used as a short term solution to increase the cash inflow. However, It needs to be implemented with utmost care.

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