Why I’m More Certain Than Ever That Taxes Will Rise…Eventually

I wrote The Retirement Tax Bomb back in 2019 because I believed taxes were bound to rise—and now, I’m more convinced than ever that something drastic will have to change. At the time, I hoped our elected officials would take action before we reached a true crisis point. But here we are, years later, and meaningful reform still hasn’t happened. Frankly, I don’t see the political will appearing anytime soon. That’s the unfortunate part. The fortunate part—for those paying attention—is that there’s still time to plan ahead.

Before we dive in, a quick update: last week, the House of Representatives passed their version of what’s been dubbed the “Big Beautiful Bill.” It includes a range of measures, one of which is a permanent extension of the low tax rates first enacted in the 2017 Tax Cuts and Jobs Act. As you probably know, the bill still has to pass the Senate. If that happens, the two chambers will reconcile their differences before anything hits the President’s desk. So it’s far from a done deal. And even if it passes, I still don’t believe these tax rates will be permanent for the rest of your lifetime.

In this blog, I’m going to lay out exactly why I think higher taxes are still in our future—regardless of this bill—and why proactive retirees should be taking steps now, not later.

1. Politicians Won’t Touch the Real Drivers of Spending

Both political parties talk a good game when it comes to fiscal responsibility, but neither has the appetite to cut where it really counts: Social Security, Medicare, and defense. Some Republicans (like George W Bush and Paul Ryan) in the past tried  touching Social Security, only to be reminded of why it’s been called the “third rail” of American politics for a reason. Barack Obama in 2011 offered House Republicans a “grand bargain” to reform Social Security, to no avail, and then in 2016 denounced any cuts to Social Security and instead said the program should be expanded.

Elon Musk, a huge financial backer of Donald Trump in the last election, famously said that his goal was to cut $1 trillion from the federal budget. It’s why he created DOGE, to find ways to save government money. But after 6 months, he’s come to a conclusion: Republicans aren’t serious about sending cuts. Let’s go to Twitter: 

You can be the richest man in the world, you can hold enormous sway with the President of the United States, you can be running multiple billion dollar companies. But there are some things in life that money can’t buy. And getting politicians to cut spending seems to be one of them.

The reality is both sides know that they’re playing with fire any time they go too close to changes towards these programs. Even lesser known programs, like USAID, faced enormous backlash when spending cuts were proposed and implemented, and that’s not even for U.S. citizens.

So what happens when spending keeps growing and nobody’s willing to cut it? The only lever left is revenue—raising taxes. It won’t happen overnight, but it’s inevitable.

2. Demographic disaster: Boomers Retire, Birth rate tanks

America’s population is aging out, and it’s a fiscal nightmare. Baby Boomers are retiring en masse, drawing on Social Security and Medicare while contributing less to tax revenue. Meanwhile, Millennials and Gen Z aren’t having enough kids to replace them—U.S. birth rates hit a record low of 1.6 children per woman in 2023, well below the replacement rate of 2.1. Fewer workers mean a smaller tax base to support a growing retiree population. By 2030, one in five Americans will be over 65, straining entitlement programs and forcing the government to crank up taxes to bridge the gap.

3. Immigration Won’t Bail Us Out