"Tax-free" always has a nice ring to it. The higher the income tax rate the nicer the ring. The old top rate, at 35%, was bad enough. The current highest rate — 39.6% — has created a flurry of activity to legally avoid the tax.
But wait! There is an additional surtax that can bite you for another 3.8% on passive investment income. And there can be more: your home state may have an income tax. Some states (like