I do see higher tax in the future as well. It is a near-certainty event with the aging population and increasing deficit. Also, politically, there’re many young workers who can not find jobs right now and research indicated that recessions in early adulthood can shape people’s support of government intervention.
But as I have been arguing ealier, even if we see the start of the shift towards a pattern more familiar to Europeans (big government, higher taxes). It does not translate into higher income tax for all group of the people. The people will call forth demands for a more generous social-safety net, which in turn makes a steep tax structural, just like what it is in Europe.
So take France as an example, their tax table works out as following:
Up to €5,875 0%
Between €5,876 – €11,720 5.5%
Between €11,721 – €26,030 14%
Between €26,031 – €69,783 30%
Above €69,783 40%
On top of that, there is 19.6% VAT (2.1% drugs, newspapers, theatres and 5.5% raw food, books).
The overall burden of the tax will be higher. But as joec has pointed out, that doesn’t mean Roth will certainly beat IRA, unless you have a really high IRA-distribution each year.
Lastly, just to point out, when AN said “15% of the $1.8M is $281882. So, you’re still going to pay roughly $170k more in taxes.” That is $280K tax starting from 30 years from now, rather than $112K taxes starting from today. All things being equal. I would rather pay $3 taxes 30 years from now rather than $1 tax today, as I am sure inflation will eat up most of its purchasing power (just assume a moderate 4% inflation rate each year).
The only way the governments can get out of this mess is a combination of tax and printing money. Of course, they could hope to borrow more, but foreigners may not want to lend them anymore, as Greece is teaching all of us recently.
