2centsworth.info

There was an interesting editorial in the July 27th USA Today talking about the attempt by the Republicans to do away with what they call the “Death Tax” and what the rest of us know as the Estate Tax. Basically, it is a tax on inherited wealth.

Doing away with it was on the top of GW’s legislative agenda from the beginning of his first term. (After all, George Senior is getting on in years and repealing the estate tax will save GW millions of dollars when GH kicks the bucket.)

The main Republican tactic has been to give the Estate Tax an unattractive name… After all, who could be in favor of the Death Tax? And to get everybody all teary-eyed with the thought of hundreds of “family farms” being sold because of this huge tax burden imposed by the evil IRS and the Death Tax.

The USA Today editorial was quoting from an analysis done by FactCheck.org and itemized some rather interesting facts:

• Only 1% of all the estates settled in 2003 paid any “Death Tax”
• Of the 18,000 estates that did pay “Death Tax” in 2003 only 340 were a single farm or small business
• Eliminating the “Death Tax” will cost the Treasury $196 billion over the next ten years (Which will have to be paid by other less wealthy taxpayers or will result in a commensurate increase in our already jaw-dropping national debt…)
• Under the current Estate Tax, estates worth between $1 million and $2 million only pay %4.7

The bottom line is that repealing the “Death Tax” will actually hurt 99% of the population and will only benefit the richest 1% of the population which just happens to include the President, every member of his cabinet, and a substantial fraction of “our” Senators and Representatives.

One last quote from the USA Today editorial “The Senate measure, which is still being negotiated, would tax inherited wealth of millions of dollars at a lower rate than what a teacher pays on a $70,000 annual salary. It would also give inherited wealth a more privileged status than money made from hard work or putting capital at risk.”

I find it striking that, even after months (heck, years!) of public debate and newspaper articles, the average US citizen does not understand that Congressmen from both parties have been, in essence, using Social Security to swindle the public for going on thirty years now.

We now have the leaders of the Congress intoning that “Social Security is in a crisis and needs to be fixed.”

And what is the substance of this crisis?

That the “BabyBoom generation” is about to retire and there won’t be enough money in the Social Security system to pay for the benefits they have been promised.

OK, that’s simple enough… But let’s analyse that further:

• What is the “BabyBoom generation”? Basically it is the people born in the period shortly after World War II, roughly, between 1945 and 1960. There was a significant spike in the birth rate during that period over the birthrates during the Depression or during the 1960/70’s.
• Why won’t there be enough money in the system to provide the benefits they have been promise? The answer is that money used to pay the Social Security benefits for those that have retired is taken directly from the paychecks of the younger workers who are still in the workforce. Because of the BabyBoom “bulge” there will be more people retiring and drawing benefits than there are working folks to pay for the benefits.
• What seems to have escaped everyone’s notice is that, for the last 25 years or so, the BabyBoomer’s have been paying more into the system than the Depression era generation has needed to pay for their benefits.
• And what happened to all that excess cash that the BabyBoomers have been contributing to the ironically-named Social Security Trust Fund? Basically, two generations of Democratic and Republican Congressmen have conspired to spend the excess funds on pork-barrel projects that would help them get re-elected.
• And they did this in the full knowledge that by looting the fund they were endangering the benefits of the BabyBoomers and creating this so-called crisis.

To put it simply, for 20 to 30 years, the BabyBoomers have been required to pay vastly more into Social Security than was needed to pay current retiree benefits. And for 20-30 years, Congress stole the excess. And now Congress and our Billion-Dollar-Baby President are telling the BabyBoomers, “Sorry but we are going to have to cut your benefits.”

And even now, with twenty years to go before the tail end of the BabyBoom retires, Congress is still looting the Social Security contributions.

And this idea of private accounts for Social Security is another scam. If anyone wants to invest retirement savings in stocks or mutual funds we already have a slew of IRA plans, Keogh Plans, and 401K’s, and 403B’s. We don’t need Social Security private accounts in addition.

Furthermore, Social Security was created at the end of the Depression to provide a limited safety net after an entire generation had lost their shirt in the 1929 stockmarket crash.

And by taking Social Security contributions of future workers putting them in private investment accounts means there will be even less money avialable to pay benefits to the BayBoomer retirees.

The only people who are guaranteed to benefit from Social Security private accounts are the well-connected firms on Wallstreet that will end up being paid billions of dollars to manage them.