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First of all, I don't think we should have ever made the income tax constitutional. Second-If God is satisfied with 10%, then I see no reason the Government can't do the same.
Third-No one should have to pay more than 30% of their income in Federal State and Local taxes.

I believe that the income tax should be replaced by a consumption tax which is not levied on necessities. This would help tap into unreported income resulting from cash only transactions that sometimes occurs. Combined income for Hubby and I has always been less than $100,000. When we first married, we were so poor we could have qualified for several Federal benefits, but never signed on, preferring to maintain independence.

So that's my bias. I agree that $250,000 is not so rich in expensive cities, and have pointed that out to others when discussing Obama rhetoric. I hate this class warfare crap, and have learned to hate the words “fair share”.

Now to your current situation:

Perhaps you should reconsider the 401k contributions? If I understood you, you are saving for a house and not contributing to the 401k. If you make the 401k your savings for retirement and down payment for your house combined, there might be some advantages. A company match is like haveing your employer help pay for part of your down payment.

Start with the current amount you are setting aside for this savings. In the future, channel all raises into this too. This will lower your taxable income which means more money in your pocket so to speak and helps starve the beast. Part of this money would have just gone for taxes anyway.

Also, you will have an automatic good return that first year due to the Company match. If your employers have a decent stock option or purchase plan, likewise use that to get at least the company match, unless the stock is worthless with no future.

When you have enough for the down payment, you may be able to withdraw it without penalty for the purpose of buying a house, as Congress has discussed often, and down the road, that may be possible.

Even if that is not possible, most companies will allow you to borrow from the 401k and set up repayment arrangements - you will pay yourself interest.

If all else fails, you might have to pay a penalty in the same year that you get a huge mortgage interest deduction assuming you close in January and the laws don't change.