Monday, November 19, 2012
How would an "income neutral" budget deal affect seniors?
Robert J. Samuelson hints strongly at means testing in a Washington Post op-ed on Monday, November 19, 2012, p. A13, “An outline for a deal”, called online “The ‘fiscal cliff’ deal we need”, link here.
Samuelson suggests a one year increase in top rates while the parties negotiate a long term plan that treats all income the same but doesn’t raise rates.
I would think that incremental rates on income that is consumed personally could be raised at the top, whereas income that is plowed back into hiring workers for a business would not be.
From a moral perspective, it’s possible to go after inheritance and certain potentially abusive use of trusts – except that when people take care of their own families, the government won’t have to take care of them. Spousal survivorship inheritance has always been based on the notion of complementarity – an idea that offends some when thinking about how reforms affect same-sex couples – until again, think – if people even in same-sex relationships take care of one another after death, they won’t need government as much.
While Medicare premiums could be raised somewhat based on income, I don’t think that current Social Security benefits should be touched, because they are (for practical purposes) income from what amounts to an annuity contract for FICA taxes previously paid. To take from those “who can afford it” would amount to expropriation of current means, not future.
I supposed I could be personally vulnerable to bargaining. “Bill, you could give up your own online publishing and go sell life insurance [using your online presence to support only that] because you do have expertise in it.” That could even be combined with certain kinds of medical supervision. See how offensive that it to me? Do others have a right to tell me what my own goals in my life must be (which were calculated based on past “promises” and “contracts”)? Yet some social conservatives like O.S. Guiness (Books blog, Nov. 5, 2012) say emphatically, “yeth” – my purposes mean nothing until they meet the demands (real needs) of others.
One idea could be counting Social Security income fully (not pre-exempting it before 1040 Line 38 and then having the “up to 85%” formula), starting in 2013. That could be fair, if the overall rates were set up right.
By the way, I modified my Nov. 5 posting on the Alternative Minimum Tax (AMT). There does not seem to be any discontinuity in the tax, as I had previously thought (as had other commentators). Samuelson didn’t mention the AMT in his column today.