Municipal Tax Bond Alternative Act

Municipal Taxable Bond Alternative Act - Amends the Internal Revenue Code to allow a State, a possession of the United States, any political subdivision of any of the foregoing, the District of Columbia, or any issuer of qualified scholarship funding bonds to elect to issue taxable obligations, the interest of which will be included in the gross income of the recipient.

Directs the Secretary of the Treasury to pay without condition or requirement 40 percent of the interest yield on each obligation for which the election of taxability has been made.