Or, you could put it into a UST note like the 1.50s of 3/31/06. It yields 3%. However, only the coupon is taxable at ordinary income rates. That other 1.50% is long term cap gains at 15%. Plus, there's no state income tax on the coupon (and probably little on the cap gains portion). So, at worst, I figure it's about 2.25% net AFTER tax.
Not bad for one year idle money, in my book.
We (here in NJ) have had a terrible turn of events. Last summer, that disaster of a governor (McGreevey) pushed through a new tax bracket on top of the old one (6.37% at $150,000+. Now there's 9% (8.97% to be exact) at $500,000+.
Well, it's not just the high rate but it's unique NJ tax code that makes me beserk. It is a GROSS INCOME state system:
1-no deductions for ANYTHING. (including interest expense incured to earn interest. No "carry game" to be played, here)
2-no tax loss carryforwards. (So, NJ shares in your wins but not your losses)
3-Long term cap gains are ordinary income in NJ.
4-Dividends get NO PREFERNTIAL TREATMENT.
Wonder why people around here are going to move to Florida? |
