Passive income from dividends or long term capital gains was taxed at a lower rate than interest income, rental income, business income, or earned income. There were also tax breaks for investing in some municiple bonds in order to encourage buying bonds for building schools, local roads, bridges, etc. During the Great Depression there were few defaults on these bonds. Ross Perot bought tax free bonds and had millions in tax free income, the towns got their building projects financed at low interest rates. The Federal system benefited from the infrastructure. Anyone may invest in muni-bonds including the secretary who had 30% of her income taxed. Buying them might lower her tax burden.

By investing in foreign equities one might have a chance to diversify one's portfolio and bring healthy returns to one's hometown; if one can find a healthy economy to invest in. I read that the govt. was going after tax cheats with Swiss bank accounts. Some foreign banks might not fare well in the current liquidity crisis.