Monday, August 11, 2008
Generational inequity: Obama panders to not-young people
Barack Obama is apparently proposing to eliminate taxes for senior citizens, the people (at any given income bracket) least in need of having their taxes eliminated.
If you're a senior citizen and earn less than $50,000 a year, Barack Obama has a deal for you: a life free of federal income tax.
Sounds appealing, right? Maybe to many seniors. But tax policy experts in Washington are giving it bad reviews. They see it as another subsidy for senior citizens, who already get federal help through Social Security and Medicare and often have economic advantages over other demographic groups.
Seniors typically have paid off their mortgages, many have investments and usually don't pay taxes on their Social Security benefits. The kids are usually grown, so they're not saddled with day care or college costs.
"The odds are the retired folks - they're getting pensions, they're getting Social Security, they have investment assets, they own a house - so ... they're better off than somebody who is 30 or 40 years younger who's trying to buy a house (and) trying to start saving," said Clint Stretch, managing principal of tax policy for Deloitte Tax.
Obama must be getting worried that the old folks are going to vote for one of their own.
Even if the bluehairs were not the least in need of tax cuts, the structure of the plan is asinine:
Tax experts across the spectrum also fault the Obama plan's abrupt $50,000 per year threshold. As described by the campaign, seniors making $48,000, for example, would pay no income tax, while someone with income slightly more than $50,000 could pay several thousand dollars in income taxes. Seniors nearing the $50,000 threshold would have an incentive to quit working.
One of the most destructive features of our current national retirement scheme is that it encourages people to stop working when they reach age 62-65. While this policy might have made sense in an economy dominated by physically exhausting jobs, there is no obvious reason today why we should encourage anybody who can work to drop out of the labor force. Not only should we not cut the income taxes for such people, but we should ensure the ultimate solvency of the Social Security and Medicare programs by moving the age of eligibility thereunder to 70. At least.
7 Comments:
By 
JPMcT, at
Mon Aug 11, 07:51:00 PM:
Typical Democrat Tax Plan...Tax cuts for people who don't pay much taxes...while raising the index on everybody else. This exercise in "fairness" is essentially buying the votes of the people whose price tag is the cheapest. We are rapidly approaching the point in our society where those who vote for benefits outnumber those who actually pay for them (and usually don't get them). Not a system built to last, for sure.
I'm retiring early....but it's because I'm an experienced surgeon whose tired of giving away his services. Thank God I've been able to put enough away that I will be living at a level comparable to a fool who is just starting out in medicine. I'm not alone. Stay healthy, folks!
By 
, at
Mon Aug 11, 08:01:00 PM:
These old farts don't have anything better to do than get scared into voting for Democrats. He's just making sure he locks up their vote - maybe he's worried that they're racist.
By , at
Mon Aug 11, 10:33:00 PM:
The ones making over $50K/year taxable are probably not democrat voters.
By Elise, at
Mon Aug 11, 10:51:00 PM:
The really odd thing about Obama is that many of his younger supporters seem to believe he will protect them from having to support the retiring Baby Boomers. But if you look at Obama's Website, he doesn't propose means testing for Social Security; he doesn't propose raising the retirement age; and he wants to close the doughnut hole in the Medicare prescription program (ie, spend more).
I haven't been able to figure out how those young supporters square their belief that he will take care of them with his policies. Maybe this tax break will make them take a closer look at the difference between what he's led them to believe on this issue and the policies he's actually proposing.
Back in January Robert Samuelson pointed out that *all* the candidates were basically lying about the looming financial crisis as the Baby Boomers retired. It's worth reading the whole thing but this part of it really stuck in my head:
[All the candidates] pay lip service to children but ignore the actual programs that will shape their future. The hypocrisy is especially striking in Obama. He courts the young, promises "straight talk," and offers himself as the agent of "change." But his conspicuous omissions constitute "crooked talk" and silently endorse the status quo.
By , at
Mon Aug 11, 11:32:00 PM:
If you're going to raise the eligibility age to "70 at least", why not go whole hog and simply say only women are eligible? That's no different than raising the age so high the average man will die before he's eligible for benefits. Social security is a massive wealth transfer scheme (young->old, men->women). Let's be totally up front about it.
By , at
Tue Aug 12, 07:11:00 AM:
Social Security is already means tested. Up to 85% of your benefits can be re-taxed if you make too much money. In 2007 my 96 year-old mother-in-law's broker rebalanced her portfolio leading to a $10,000 capital gain. That's fine and taxed at a mx. of 15%, but the amount of her SS benefits that were subject to tax jumped from about $4,000 in 2006 to over $19,000. This was taxed at ordinary income rates.
JLW III
By , at
Tue Aug 12, 09:45:00 PM:
Let's face it. The average American and voter is a moron. Young people like Obama because they think it's time that we give the black guy a shot, and it's cool, and all that tripe. They're idealistic, and basically ignorant.
I did read an interesting piece today though about how Obama's worried because all us white bread honky mo-fo's are really racists, and we say we're gonna vote for darkie, but really don't mean it. Thus, the fact that he's not way the hell out ahead of the old white guy is troubling. Of course no mention about how it's racist by the same logic that virtually all black folk plan to vote for the black guy.
The social security system has been bankrupt for quite awhile, and needs massive overhaul. I personally don't like the idea that I might have to survive to 70 to see money I've been paying in (at the max) for 20 years already, but if that's what it takes to make sure it stays solvent ... before then, however, I'd like to see ZERO dollars and ZERO tolerance to paying any monies via the SSTF or other forms of social services that rob the taxpaying American, and pony up to illegals who've paid in squat, and deserve squat.
