Warren buffet or any other smart investor takes into account 'take home returns' or 'post - tax returns'.Absolute returns do not matter - that is the reason why I would look at a 5% tax-free bond the same way as I look at a 7% bond (where the coupons are taxed at my marginal tax rate of 40%).We do not know the exact portfolio split of Warren Buffet but here is how it would differ:Like in the example above - now the 7% bond is much more attractive than the 5% bond.So if earlier I had a mix of 5% and 7% in my portfolio, now I will have only 7%.