It's in a higher bracket but you're also deferring paying. Given the choice of paying $1 of tax today or paying $N of tax later, that $1 of deferred tax at a 7.18% return is worth $2 in 10 years, $4 in 20 years and $16 in 40 years.
At a 6% rate of return and a 25% tax rate, after 40 years, even a 100% deferred tax rate is financially preferable to a 25% immediate tax rate, ie: I make more from the interest on my deferred tax than on my entire principle.
At a 6% rate of return and a 25% tax rate, after 40 years, even a 100% deferred tax rate is financially preferable to a 25% immediate tax rate, ie: I make more from the interest on my deferred tax than on my entire principle.