Tax revenues, as a reminder, are used to fund the government's expenses and obligations. Expenses are the funds required to fund the government's day-to-day operations. Interest on debt and promises made to citizens through programs like Social Security, Medicare, and the Affordable Care Act are examples of obligations. According to the Heritage Foundation, tax revenues will be entirely consumed by 2030 at current tax rates and expenditure levels. In terms of empirical evidence, we are currently experiencing a period of historically low tax rates. This suggests that the government will be forced to raise tax rates in the future to meet its obligations. Forecasting future tax rates is, at best, an imprecise science! The best way to deal with the uncertainty of future tax rates is to invest in a combination of pre-and post-tax accounts. You'll be able to choose which accounts you want to draw income from, which will help you save money on taxes.
