Why I Believe Tax Rates Must Rise in the Coming Years
As someone deeply engaged in estate and tax planning, I’ve spent years helping clients navigate the complexities of our tax system. But the truth is, no amount of planning can ignore the fiscal realities facing our country. I believe tax rates will have to increase over the next several years—not because of politics, but because of math.
Former U.S. Comptroller General David Walker has long warned that America’s fiscal trajectory is unsustainable. In his book Comeback America, Walker outlines how unfunded obligations, particularly Social Security and Medicare, are crowding out other budget priorities. He argues that without significant reform, the government will be forced to either double taxes, slash spending, or both.
Walker’s warning isn’t just theoretical. “If Congress continues to kick the can down the road on creating permanent fixes to entitlement programs and liquidating debt, taxes will have to rise”. He’s not alone in this assessment. Many economists agree that the current historically low tax rates are unlikely to last, especially as the national debt continues to climb past $36 trillion.
The flagship legislation called the One Big Beautiful Bill—made permanent the reduced marginal tax rates from the 2017 Tax Cuts and Jobs Act into law. Well… “permanent,” at least on paper. It’s more like temporarily permanent. Even if those rates had sunset and reverted to pre-2018 levels, the fiscal impact would have barely made a dent in the mountain of debt Washington has accumulated. Walker has suggested that the effective tax rate for many Americans could rise from 20% to 40% by 2030. That’s not a political prediction—it’s a fiscal inevitability if we don’t address the structural imbalance between spending and revenue.
From a planning perspective, this has profound implications. Clients who are currently in the 12% tax bracket could find themselves in the 22% bracket simply due to the loss of a spouse. That’s a near doubling of their tax rate, without any change in income. It’s a stark reminder that tax planning isn’t just about reducing today’s tax liability, it’s about reducing taxes over a lifetime.
Walker also emphasizes that the wealthier you are, the more likely you’ll bear the brunt of future tax increases. “The government will likely increase the effective tax rate for those who are better off,” he said, noting that this could come through higher marginal rates, the elimination of deductions, or both.
Waiting for policy changes to dictate your financial future is a risky bet. Now is the time to act. In my view, the writing is on the wall. We’re living in a period of artificially low tax rates, and it’s only a matter of time before they rise to meet the demands of our fiscal obligations.
Let’s find ways now to reduce or eliminate taxes and take control before Washington does.
This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel.
Investment advice provided by Fourth Dimension Wealth, LLC, a registered investment advisor and a separate entity from LakePointe Advisors, LLC.
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