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.
Even those whom he's pandering to can see the line of bullshit.
Seniors already get preferential treatment in the tax code. They can claim an additional standard deduction and only a portion of their Social Security benefits are taxed. Many don't pay payroll taxes because their income is from investments rather than wages.
"The proposal would exempt comparatively well off, though not affluent, senior citizens from taxes and give them a benefit not generally available to working Americans," said the Tax Policy Center paper. It "helps only those low-income seniors who currently pay income taxes. Those too poor to owe any tax - arguably those most in need - would get no benefit."
Even the powerful seniors' lobby doesn't seem excited about Obama's idea. An AARP bulletin on the presidential candidates' tax plans barely mentions it, noting that Obama's proposal could partly offset additional taxes that Obama would impose on seniors through higher tax rates on dividends and capital gains.
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.
Unfortunately for Obama, senior citizens can smell a snake oil salesman a mile away, AND they come out to vote in large numbers. Never underestimate someone who APPEARS to be a frail old grandmother. She didn't get to be that old by falling for every trick in the book. :)
Travis
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