To decide whether a municpal bond will help with taxes, experts advise comparing the potential returns on a tax-exempt bond and a taxable investment.

For one thing, taxable investments may be more lucrative, even after the surcharge is taken into account.

To decide whether tax-free or taxable investments make more sense, you must figure "taxable equivalent yield."

This means you must earn at least 8.3 percent in a taxable investment to get the same after-tax return.

Under the Clinton proposals, she would need 8.28 percent on a taxable investment for a comparable yield.

Moving a large amount of assets out of taxable investments into a tax-free one might trigger stiff redemption charges and interest penalties.

In fact, many stockbrokers and other financial advisers still recommend that their clients use taxable investments, Mr. Litvack said.

Paying down credit card debt returns the equivalent of as much as 20 percent on a taxable investment, which beats the Street.

That return is equivalent to a taxable investment generating 9.34 percent for a New York resident earning $150,000 and filing a joint return.

Individuals can also press for measures that would increase the return on their taxable investments or reduce their state and local income and property taxes.