LOL! said:
That's a big myth. 2X means more money that you can contribute to your 401(k) and Roth. Also the long term capital gains tax rate is 15% for even the wealthy. Qualified dividends are taxed at 15 as well. Unrealized capital gains are not taxed at all.
As a concrete example, my spouse got a raise last year and she will be 50 later this year. So her taxes actually went DOWN because she can contribute all the raise and more to her 401(k) plan.
I agree but it got me wondering so I went back to my tax return of 1994 and compared it to last year - 2005.
In 1994 I had 3 dependants (wife and 2 children), a mortgage ($3,500 in interest), state income taxes of $2,200, property taxes of $500. Gross salary was $81,250 before 401(k) etc. other income of $3,400 giving a total of $84,650. I paid taxes of $14,220 that year.
In 2005 I have only 1 dependent (wife), no mortgage, no state taxes, no property taxes. Gross salary was $187,700. Other income of $17,300 giving a total of $205K. I paid taxes of $34,800.
That is an increase in gross earnings of x 2.42. Taxes increased by 2.44. I know that taxes have come down since then but I have so few deductions these days I take the standard deduction.
So from a personal point of view, I also don't believe 2x income = 3x taxes.