By Dan Kennedy • The press, politics, technology, culture and other passions

Those greedy low-income seniors

Some mighty odd rhetoric this morning from the McCain campaign, which falsely claims that Barack Obama wants to raise taxes on everyone earning more than $42,000 a year. Boston Globe reporter Michael Kranish writes:

Democrat Barack Obama has proposed eliminating the federal income tax for senior citizens on income below $50,000, which his campaign says would mean that 7 million seniors would not pay the tax, with an average tax cut of $1,400….

McCain, meanwhile, has not proposed a tax cut specifically for seniors. “We haven’t tried to target every demographic, the way Obama does with a handout, so we don’t have that,” McCain economic adviser Douglas Holtz-Eakin said.

A “handout”? What is Holtz-Eakin saying? That tax cuts are just fine as long as they’re not targeted to low-income senior citizens?

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  1. Peter Porcupine

    DK – this is a tricky subject, and not a popular one. Are we talking Income or Earned Income?Many well-to-do seniors are able to manipulate income to qualify for various government tax incentives. Annuities, insurance proceeds, and MANY other such instrumetns are not counted as income. For those of us working, income is usually what we earn; since most seniors do not work, their household cash-on-hand is usually NOT what we would call ‘income’.Right now, here in MA, we have property tax circuit breakers, automatic 25% discount on auto insurance (regardless of driving record!), and many other such breaks for seniors. There was even legislation passed that allowed seniors to not pay taxes increased by Prop. 2 1/2 overrides, even though they can vote on them!All I am saying is – the richer the senior, the more likely it is that income has been diverted into various entirely legal tax-free streams. Without asset testing, Obama’s tax break is a travesty for working families. Doesn’t a tax break without age limits targeted to the working class make more sense?

  2. Dan Kennedy

    PP: Wouldn’t that be a “handout” to the working class? Why is a McCain adviser referring to tax cuts as “handouts”? Do they cease being handouts if they are for people making more than $250,000?

  3. Dot Lane

    Exactly. If McCain starts saying he supports continuing Bush’s handouts to the wealthiest people in this country, then by all means he can call Obama’s plan a handout. PP is right though: asset testing is critical for a program like this, but my guess is that Obama’s overall tax cut plan already wraps up a lot of the seniors he is targeting. This may just be a way of sharpening the message.

  4. Ani

    PP,I’m puzzled by how the simple earned income/ unearned income distinction fits in with this issue. There’s plenty of unearned income that is plenty taxable. If you’re distinguishing taxable from exempt income, I follow that better (I think).dot lane,Isn’t “asset testing” a tricky business when assets like a home cannot easily be used to pay taxes or grocery bills?Don’t we want to help people struggling, salaried or retired, without pitting one group against the other?

  5. Peter Porcupine

    Ani – Agreed. There are many angles to this income question. How do you help the needy and avoid those gaming the system? I would suggest exempting a principal residence less than the estate tax limit from the calculation (and counting the balance as an asset) would help. And yes, I should have said taxable vs. exempt.DK – think about the message, rather than the choice of words. As Ani says – does pitting one group agains another make sense? Has the stereotype of impoverished senior outlived is reality, compared with the burdens of a young single mother or struggling member of the ‘sandwich generation’? How is an arbitrary age based break justifiable except as a vote getter?

  6. Dan Kennedy

    PP: I’m agnostic on the particular tax cut Obama has proposed. You may well be right on how a better tax cut would be structured. But I am simultaneously amused and appalled that the adviser to a campaign that wants to extend Bush’s tax cuts for the rich would describe tax cuts for lower-income people as “handouts.”

  7. Ani

    PP,Glad to find some common ground with you!DK,Yeah, the “hand-outs” thing does sound like classism or bias or really unpleasant condescension, but I have it filed somewhere in the back of my mind that we are supposed to think of tax cuts for the wealthy as enabling the growth of businesses, jobs, and the economy through the investment of the money not paid in taxes– that ol’ trickle-down idea. I’m not saying I agree with it, but I will say that some may see tax cuts functioning in conceptually different ways depending upon who gets them and how the money saved is used.

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