I've been using this site for years for reasons everybody reading this is aware of (fantastic job Ken!). I saw Ken also includes mutual fund money market rates, which haven't really looked as good as banks and credit unions. For example, the Vanguard Prime Money Market rate is 1.12%, which isn't shabby, but there is a long list of banks and credit unions that pay more than that. What is interesting to people in high tax states (like NY and CA) and have high incomes is something like the Vanguard NY Municipal Monday Market which is paying 0.78%. I grant you, 0.78% doesn't sound exciting but becomes exciting at the high tax brackets:
Fed Tax Rate = 39.6%
NY Tax Rate = 8.82%
NY Deduction = -3.49272%
Pease limitation= 1.188%
Tax Rate = 46.11528%
Fed/State Tax Free Mult = 1.8558x
The negative NY deduction is due to the fact that federal law currently allows state taxes to be deducted (avoiding double taxation, but Trump's new plan would allow double taxation). The Pease limitation is due to the fact that in the higher brackets you can't itemize all your deductions (doesn't even go into you can't use the personal exemption for yourself, spouse or kids). So every dollar earned is effectively taxed at 46.11528% (yet all we hear about is how the rich don't pay their fair share, even though the top 1% of tax payers account for nearly half of all tax revenue and 47% of the population pays nothing in federal taxes, look it up if you don't believe this). Sorry, back to the task at hand. The 46.11528% tax rat makes the 0.78% effectively a 0.78*1.8558 = 1.45% saving rate! So the Vanguard NY Municipal Money Market is now at the top of the list for high income tax payers living in NY. I'm not saying this should be tracked on this site as this applies to very few people but was surprised myself at how important looking into after tax savings can be. People in lower tax states and lower tax rates would still benefit but to a lesser degree.
People at work argued that this is just another benefit for the rich. The way to take away this "benefit" would be to tax the rich at lower tax rates. I'm not saying the rich should be paying less taxes or the poor should be more taxes but it rankles me when people complain the rich are not paying their fair share when half the country is paying nothing and the those in the top tax bracket is forced to pay half of their income to the government. Yes, the rich do avoid paying by taking deductions but by far the largest deduction the rich take is giving their money away to charity. I believe they do this as they'd rather see their money be used more effectively by good charities than the wasteful government.
