The tax advantages of municipal bonds might be reduced this year, but it is “highly unlikely” that all exemptions will end. And, even assuming lower exemptions owing to tax cuts later this year, munis would still make sense for most high-net-worth portfolios. Those were some of the comments of a big money manager at a news conference in Manhattan on Tuesday.

“Amid a series of tax reform possibilities, munis will face challenges in 2017, but will maintain a tax advantage,” two BlackRock officials said in a paper. They argued that munis of short to intermediate term should be in most portfolios. That’s because individual tax-code changes are unlikely in the short term, they added.

“Change may well come, but not likely in 2017 as Washington focuses on the comparatively easier task of corporate tax reform,” according to Peter Hayes, head and managing director of BlackRock’s Municipal Bonds Group. BlackRock officials also said that, even if the top individual tax rate is reduced from 43.4 percent to 33 percent, the argument for the tax break for most portfolios would remain.

“Yes, the case for tax exemption is still there,” Hayes said in response to a question from Financial Advisor magazine. If there was a huge cut in the highest tax rate -- say down to 28 percent -- the municipal market might have to readjust on yield, but munis would still make sense, Hayes added. “We still think it is a very important source of high-quality income that does well in periods of high volatility, and that is still the case.”

Sean Carney, head of municipal strategy at BlackRock, said if the top rate is dropped to 33 percent that the municipal bond market “will be able to handle that.” He noted that, in the 1980s, the top rate was dropped from 50 percent to 28 percent and the muni market survived.

And Hayes, along with Carney, contended that no matter what the tax-rate cut, some exposure to munis would still be an effective strategy for most investors. “I don’t think there is point where they don’t make sense,” Carney said, “given the unique advantage that munis give a portfolio.”

So what if all muni-bond tax exemption is ended? BlackRock officials said that it is unlikely that the muni-bond exemption would be discontinued by this administration.

“Let’s say they said retroactively that the exemption would be ended. The value of all existing bonds would go down. A lot of people would be hurt,” Hayes said.

BlackRock officials contended that munis will also continue to be an essential part of the average portfolio for another reason: They are going to play an essential role in the nation’s economy.

“State and municipalities rely on municipal debt as a low-cost, efficient way to finance capital improvements and fund infrastructure,” BlackRock officials wrote in a publication, Will Tax Reform Hurt Tax Exempt Bonds? “The federal government hurts itself if it impedes state and local ability to create jobs, sustain their economies and improve the quality of life for Americans.”