BW – thanks for the further meth/math. You use 10% annual appreciation and 30% tax rate. More realistic is 4-6% annual appreciation, and 50% tax rate (currently we are at 42%, and it’s not going to get lower).
Regarding opportunity cost, what about the lower tax rate applied to long term capital gains? I believe your examples assumes the “alternative opportunity” gains are taxed at the same rate as our income rate. Right now, long term gains are taxed at half of income. I don’t know what the future holds.
As far as whether the government will say “just kidding” and tax the “tax free” gains in the future (because it can), I suppose they would equally be grabbing whatever gains we obtained from the alternative “opportunity,” so either way …
