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2

and 2005 (5)

After-tax rates of return comparison – years 2004

(4)

(3)

(2)

Table 7.3 (1)

Necessary rate of return for the investor to realize 6% after tax

After-tax return from a corporate bond paying 7.5% taxable

After-tax return from a bank paying 6% taxable

After-tax return from a muni bond paying a tax-free yield of 6%

Federal tax bracket

114

7.06% 8.11% 8.45% 9.10%

6.38% 5.55% 5.33% 4.95%

5.10% 4.40% 4.26% 3.96%

6% 6% 6% 6%

15 26 29 34

9.62%

4.68%

3.74%

6%

37.6

2

These figures represent the tax brackets for the years 2004 and 2005. It’s important to remember that, as current tax law stands, the tax rates will continue to decrease until the year 2006. Neither Table 7.2 nor Table 7.3 accounts for the newly implemented 10-percent tax bracket.

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