Why do some people believe tax rates will rise in the future?

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As a reminder, tax revenues are what the government uses to fund its expenses and obligations. Expenses are just what it takes the fund the day-to-day operating activities of government. Obligations include interest on debt, promises made to citizens through programs like Social Security, Medicare, and the Affordable Care Act.

The Heritage Foundation argues that given at current tax rates and expenditure levels, tax revenues will be fully consumed by 2030.

Empirically, we are currently at a period of historically low tax rates. This suggests that in order for the government to meet its obligations in the future, it will be forced to raise tax rates.

Having said that, predicting future tax rates is an imprecise art at best! The best way to manage the uncertainty of future tax rates is to hold you retirement in a mix of pre and post-tax advantaged accounts. That way you can choose which accounts you wish to draw income from for maximum tax efficiency.