As particular states are beginning to suffer major shortfalls in sales tax, income tax and property tax revenues, many are moving into a situation of deficits. At the same time, states are discovering that their muni bonds are no longer viewed as 'totally secure', and thus are now commanding interest rate premiums. As a resident of New York, which already has a fairly stiff state income tax rate, and with pretty good odds that the state income tax rate must be increased in 2008 in order to balance the state budget (in the absence of cuts in gov't spending of course), the equivalent after-tax rate of return available on new New York muni bonds (which are exempt from federal + state income taxes) is really starting to rival and is likely to exceed available interest rates on fully taxable CD's.
thoughts ?



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