Aside from the fact that the newest tax rates have a less than six-year lifespan, the tax issue that continues to be missed by annuity critics is that income tax rates–new and old–are marginal rates.
Furthermore, our system of income taxation in this country is a graduated system. So when an investor is ready to retire and begin receiving income, it is unreasonable to assume that 100% of the income distributions from an annuity will always be taxed at the investors highest marginal income tax rate.
Presumably, the income from the annuity is being used to replace some of the compensation that existed prior to retirement. And just like pre-retirement income, the various marginal rates on retirement income–which are graduated as income increases–mean that the overall average tax rate for that investor will be less than the highest marginal rate.