Republican state legislators want to give me a tax break. While I appreciate the sentiment, I don’t really need a tax break and — more importantly — I don’t deserve a tax break.
Multiple bills have been introduced to eliminate all taxes on Social Security income, providing a tax cut to me and a whole lot of seniors even less in need of tax relief than I am.
Republican leaders say this tax cut will be among their top legislative priorities. The cost is much more significant than you might imagine — nearly a half-billion dollars a year.
I don’t have a country club membership or a timeshare in Florida. But in retirement, I am living much more comfortably than my parents or grandparents — thanks to Social Security, Medicare, the prescription drug benefit, Minnesota’s Property Tax Refund (PTR) program and modest retirement savings.
We baby boomers have been treated pretty well. However, I have two sons and a daughter-in-law in their early 30s. I worry about their future economic well-being, as well as the generations to come.
Eliminating state income taxes on Social Security might look like a boon for low-income seniors. But look again. The lowest income retirees pay little or no taxes on their Social Security benefits. About 92% of Social Security benefits subject to taxation are collected by taxpayers with at least $50,000 in total annual income, and about 72% is from taxpayers with at least $75,000 in income, according to the nonpartisan Minnesota House research staff.
In the mid-1980s, while still serving in the U.S. Senate, Republican Dave Durenberger tried to elevate the issue of “generational equity” — the disparities in needs and benefits between elderly Americans and younger age groups. He even helped found a policy group to promote public discussion and debate of the topic.
Some critics accused Durenberger and his group of trying to instigate intergenerational warfare. But their goal was to engage middle-aged and older people in a discussion of issues that would affect their children and grandchildren. They expressed particular concern about demographic trends such as the growing percentage of children being raised in poverty and the increasing ratio of retirees to workers — those left to pay the bills for social welfare programs.
“Today, I would be even more concerned than before,” Durenberger told me recently. He said Minnesota and much of the nation have been “very welcoming” of immigrants and refugees — an attitude he shares — but that the economic problem “may be getting even worse without anyone knowing the extent of it.”
There is no shortage of warning signs. Last summer, the federal government projected that the Social Security Trust Fund could be depleted by 2033, a year earlier than expected. Even worse, it estimated that Medicare Part A, which pays for hospital bills, could face a shortfall by 2026.
Will Social Security and Medicare be there for our kids and grandkids? Or will they simply face tax increases and benefit cuts to keep these programs afloat?
Then there’s the issue of the federal debt. Congressional Democrats have no concern about deficit spending when it comes to social programs, while Republican deficit hawks become doves when it comes to tax cuts. The last federal budget surpluses came under President Bill Clinton. Don’t hold your breath waiting for that to happen again.
The Peter G. Peterson Foundation now estimates the federal debt at more than $30 trillion. That’s $90,000 for every man, woman and child in the nation. Every day, our nation spends $900 million on interest. In 10 years, that number is expected to triple, according to the foundation.
I’m no economist, but I fear that someday our federal credit card will be rejected and future generations will have to live with the consequences.
When I entered the University of Minnesota in the mid-1960s, the tuition was so low that many of my peers and I were able to work our way through school, emerging debt-free. Sadly, that no longer is possible. Today, many young people leave college with $30,000, $40,000 or more in student loans. That translates into a long wait to buy a home or a new car.
Rather than receive a tax cut, I’d much rather see the money invested in future generations, in the form of early childhood education and reduced college tuitions. It’s time for a little generational equity.
Steven Dornfeld, a retired journalist, wrote about government and public policy for the Minneapolis Tribune and the St. Paul Pioneer Press.