Some policy wonks are concerned about intergenerational equity and entitlement reform. Anothers express concern about estate and gift tax breaks and excessive tax expenditures that go to wealthy people. These two groups don’t overlap as much as they should. Affluent seniors can afford to contribute more in addressing our economic and budgetary problems. So a hard look at state and federal tax expenditures which favor these men and women is long overdue. More here.
Author: Harold Pollack
Harold Pollack is Helen Ross Professor of Social Service Administration at the University of Chicago. He has served on three expert committees of the National Academies of Science. His recent research appears in such journals as Addiction, Journal of the American Medical Association, and American Journal of Public Health. He writes regularly on HIV prevention, crime and drug policy, health reform, and disability policy for American Prospect, tnr.com, and other news outlets. His essay, "Lessons from an Emergency Room Nightmare" was selected for the collection The Best American Medical Writing, 2009. He recently participated, with zero critical acclaim, in the University of Chicago's annual Latke-Hamentaschen debate.
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14 thoughts on “Tax expenditures for wealthy seniors & entitlement reform”
They tend not to overlap much because most people distinguish between giving someone somebody else’s money, (Entitlements) and letting people keep their own money, which is what ‘tax expenditures’ boil down to.
The current tax treatment of Social Security itself seems good to me: you pay taxes on some of it, if you have other income. One of my many grudges against Obama and Pelosi is that they did not do something about inheritance taxes when the Dems controlled everything, and left it as an issue which the Reeps could use – and did. The kind of deal which was on offer when the Dems had both houses was $3-5 million tax free – this seemed okay, it’s a nice family house or getting all your grandchildren through college. What they had to swallow once the Reeps had the House and much more Senate seems excessive. My dad paid little or nothing in tax on his Social Security income, which FAR exceeded what he had paid, and he died with more of an estate than 80% of men, this seemed to me unfair to the burger-flippers who were paying his Social Security in his 9th decade. My inlaws were paying NO state tax on their pensions in Illinois, despite having higher than average income as pensioners. So I’m with you.
One of the things which worries me in thinking about aged is the big push to increase the retirement age for Social Security. I am a member of the soft hands set, myself, you can chain me into my cube for decades more and I’m not really hurting. But I worry for masons and carpenters and cashiers, who have physical demands and arthritis. I’d like to see more of a soft landing for people getting into their 60s. Maybe identify some jobs as not-for-the-young. Receptionists/building guards? construction inspectors, restaurant inspectors. For the inspectors you could set a qualification of having worked 25 years in the industry. The old can’t all go into the sunset giving out hot samples at Costco!
@Brett – I’ll violate the unspoken local rule of not rising to your bait. The problem, as ever, is the weasel phrase “their own money”. How did this money become theirs? Did they extract it from the earth by the sweat of their own brows, without using any communal resources? No public school in their youth? No federal or state aid when they went to college? No public highways or transit? Did they manage this extraction without in any way costing others their health or taking advantage, without directly paying for them, of shared resources? Do they depend on communal resources for protection of “their own money” and their property? What exactly gives value to “their own money” and their property? Is it the laws, customs and shared wealth of the community that they’re part of?
There are many unstated assumptions in the idea of private wealth. Those who use the phrase “their own wealth” seem to generally ignore the very real dependence of that wealth on the community. Creating and keeping that wealth depends on communal actions and facilities (through the instruments of government) that have to be paid for. Either those who are getting the greatest benefit will pay for it or they won’t. If they choose not to, we will eventually become – even more than we already are – another nation with extremes of wealth and poverty with almost no middle class. More like Argentina and less like Western Europe.
There are many unstated assumptions in the idea of private wealth. Those who use the phrase â€œtheir own wealthâ€ seem to generally ignore the very real dependence of that wealth on the community. Creating and keeping that wealth depends on communal actions and facilities (through the instruments of government) that have to be paid for.
A similar argument can be brought when discussing private property rights with a property rights fetishist. The community defines property – lunch counters and suffrage, for example.
Now, there’s an old argument I hear all the time from ‘liberals’: Without government, everybody would be totally impoverished, therefore government is responsible for all wealth creation, therefore government is entitled to confiscate any wealth it wants.
Nonsense on stilts.
Set aside for the moment that, like any protection racket, the main contribution government makes to wealth creation is partially refraining from violently bringing it to a halt. St aside that, like any protection racket, the next biggest contribution government makes to wealth creation is simply displacing some other government which would presumably do the same. Set aside all the ‘contributions’ to production it makes that are negative.
Isn’t it equally the case that, without the contributions of, say, farmers, wealth creation would be totally impossible? Likewise for plumbers? Dentists?
The market prices the contributions of all of these elements of production, and allocates their share. It would do so with government, too, if government were not the element of production in a position to shoot people who disagree with it’s self-evaluation of it’s worth.
And just collecting all these individual contributions to production in “community”, and then conflating “government” with “community”… That move is as lame as it is predictable. The government is no more the community than *I* am. It’s just the government.
“@Brett â€“ Iâ€™ll violate the unspoken local rule of not rising to your bait.”
Geeze, you actually ADMIT that one of the foremost rules of your little sect is that you must never, ever, actually engage in conversation with non-members.
Foster: not Argentina. Argentina is (currently) relatively enlightened. I think the libertarian paradise is more like Haiti, where even the roads from one manicured estate to the neighboring ones may be unpaved.
Since affluent seniors are mobile, states compete for their residence. Virginia gives me a tax break to dissuade me from moving to Florida, where I wouldn’t have to pay any state income tax.
Individual states can’t easily break out of this competition.
Thinking “ITS ALL MY MONEY” is about the best definition of ‘entitlement’ i can think of.
The govt. is not a protection racket – that is vile nonsense. It’s an elected body, following published rules (mostly). If you can’t tell the difference between the Nortenos and the San Francisco Police Department, I have a cheap house to sell you at 14th and Mission.
Brett – I didn’t say “government is responsible for all wealth creation”. I said that the creation of wealth and preservation of its value depend on a great many of the things government does. If you can’t understand the simple fact that our economy is hugely dependent on things like the interstate highway system, bridges, public schools, police, fire protection, the coast guard, the Hoover Dam, etc., etc., etc., then we don’t have much basis for a conversation.
I work in a business where I’m very well (privately) compensated for doing far less effortful work than many government employees – teachers, highway workers, police, and so on. My ability to do that work, and my general well-being, is thoroughly dependent on what those people do. It’s also dependent on the farmers and plumbers. I didn’t say that there was anything exclusive about the role of government. But as long as I expect to live in a society where I can be excessively compensated for working in a soft-hands business – rather than, say, wielding a hoe and carrying buckets of water to my patch of dirt all day – I damn well ought to expect to pay something for that. It’s “my money” only by virtue of all of the social structures that make my job possible, as well as making it possible for me to save and invest without (too much) fear of being scammed, kidnapped for ransom, or otherwise dispossessed.
I have trouble imagining the form of the libertarian utopia you seem to draw inspiration from, in which you keep everything that’s “yours” and there are no parasites trying to take your individually created wealth from you. I guess that’s just my own failure of imagination.
P.S. – There are some exclusive functions of government. I didn’t mean to suggest that there weren’t.
I will again point out that today’s workers are paying taxes to support retirees, with little expectation to be supported when it is their turn to retire. I will once again question the sustainability of social security and Medicare. Much as I would like to feel sorry for today’s seniors who will be out in the cold I see know reason why they should be the only group excempt from the pain caucus.
Now, thereâ€™s an old argument I hear all the time from â€˜liberalsâ€™: Without government, everybody would be totally impoverished, therefore government is responsible for all wealth creation, therefore government is entitled to confiscate any wealth it wants.
Nonsense on stilts.
Well, I agree with the business about “nonsense on stilts,” but the nonsense in question is your caricature of the argument. There are good governments and bad. Good ones contribute to wealth creation and protection, among other things. And they need money to do these things, which has to come from taxes.
I’m involved right now in a software business that shows signs of being successful. It’s a small, privately financed, company. Guess what: some of the people who work for it went to (shudder) state universities, where they learned things that they use in their jobs. I bet lots of them went to public schools, too, though I don’t know for sure. They drive to work on government roads, obeying, mostly, government driving regulations, which help avois accidents. I don’t worry much about the building collapsing one day, because it was buil in accordance with building codes, etc. Oh. Did I mention we use the Internet a lot?
Get over it.
It seems obvious to me that the structure of our society contributes
I’ll believe Brett is a libertarian when I see his post denouncing the Supremes, especially Scalia and Alito, for voiding a judgment against the ‘protection racket’ of the New Orleans Attorney’s office.
Until then, he’s a constitutional fundamentalist.
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