Old folks eating alpo to get by on their SS checks

I’ve been struck that’s not a big trope anymore like it was in the 80’s.

I read this a couple days ago.

http://tcbmag.com/Industries/Politics-Public-Policy/Minnesota-s-Great-Wealth-Migration

I read this today.

http://www.mprnews.org/story/2016/04/05/gop-presses-end-to-minnesota-tax-on-social-security

It’s not quite the exact same subject, but it’s related.  And my guess is a little targeted reform here on the taxes of old age SS recipients would go well toward the overall goal of progressivity and keep older people with a little money from moving… this seeming to be a real trend.

The Minnesota Department of Revenue estimates the GOP phase-out plan would affect 381,000 returns in the current tax year, with an average reduction of $213.

That ain’t much tax relief….

Rep. Paul Marquart, DFL-Dilworth said he supports some tax relief for senior citizens but thinks a complete exemption of Social Security income would put too big of a hole in the state budget.

“I haven’t talked to one senior citizen that wants to bankrupt their grandchildren’s future. That’s exactly what the Republican bill would do,” he said. “It would cost about $500 million a year when fully phased in.”

…that one could seriously object to.

Boy that’s some crap straw man hyperbole there.  It’s $500M in a $40B annual budget that currently runs a tax surplus.  There’s room to adjust, no one’s getting bankrupted, not that “bankrupted” is a precisely used term here.

“The vast majority of the money, if we exempt Social Security, goes to people making over $100,000 in income,” he said. “That would be investment incomes that relatively well-to-do people have, and they would be exempt from paying any income tax on their Social Security. Doesn’t seem like a good policy direction for us to go.”

Baloney.  If a codger has a $100K in investment income and $40k in SS income, we’re talking about the say $800 (guess) in state personal income taxes that the person remits for the SS income.  However many people like this there are, the relief they get ain’t meaningfully a ‘vast majority’ of dollars over the relief less affluent codgers get.

The good policy reason is to throw a bone to the snow birds, and it’s a cheap bone.  DFL is being ideologically recalcitrant here.

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3 thoughts on “Old folks eating alpo to get by on their SS checks

  1. pm1956

    They aren’t the same thing at all, and your argument is generally crap.
    1. Nobody is leaving the state over a tax on Social Security checks. People who are leaving the start are the high net worth individuals who are leaving not because of a tax on Social Security, or the 9.85% income tax rate, but because of the state inheritance tax.
    2. “throwing snowbirds a bone…” is terrible tax policy. What is even worse tax policy is trying to differentiate between types of income, and treating some types of income in favored ways (which means that other types of income are less favored). Tax policy should be as neutral as possible when it comes to economic activity–we should not try to change people’s behavior thru tax policy (unintended consequences, and tax policy is a blunt instrument). So we should treat all income the same (yes, that means no preferential treatment for dividends or capital gains, etc.).
    3. We absolutely should distinguish between amounts of income–not a flat tax, but a graduated tax on all income. And there is no reason we should not make fine distinctions–many classes (why not tax a billion dollar income more than a million dollar income?)
    3. As far as snowbirds go, if people want to migrate, let them migrate. Trying to keep them here when they’d rather leave is a fools game–that means that you are also paying to keep people here who do not want to leave (free rider problem). It is simple far too costly a solution to a non-existent problem.

    Bottom line is that this is political pandering and crap public policy, from people who are not serious about the functions of good government.

    Reply
    1. W.E. Peterson Post author

      Alright, I feel appropriately chastised for my riff being quite gaseous. I got to have a better qualitative offering if I am to stray into your policy bailiwicks.

      2… My sense of your avocational expertise and ideological preferences wouldn’t have suggested that you’d be an endorser of “tax neutrality”. Rather, I’d have figured an embrace of that view that you can tax and not tax to encourage or discourage social / economic ends.

      4… re snowbirds and other people who migrate… the observation is that along with people, assets and the taxes collected from them are leaving the state, which is undesirable.

      Reply
      1. pm1956

        Look, I’m not a complete purist on the tax neutral thing, but, from experience, you almost always create more problems when you try to shape social behavior thru the tax code than you solve. The tax code should be mainly about raising tax revenue, and it is best for the economy to do that in as neutral a way as possible.

        There are times when it makes sense to change people’s behavior–smoking cessation is a good example. A good way to change people’s behavior is to increase the costs of the behavior you want to limit, so taxing tobacco products can be a good thing to do from a social standpoint. Problem is if you get dependent on the revenue from that tax stream, then you try to maximize that revenue (instead of the original goal, of minimizing smoking), which means that you start to manage it which conflicts with minimizing smoking (which would lead, ultimately, to minimal to no revenue from tobacco taxes). I’m not certain that there is a great way out of this conundrum, other than to say it is generally better not to do it, but there are times when it does make sense.

        I read something recently that bears on this (and I can’t find it), but it was contesting the Picketty wealth inequality argument, and suggested that US tax laws were responsible for the surge in inequality. The argument went something like this: Income inequality is largely due to Corporate CEO’s getting huge stock option grants and then making the value of the stock climb. This practice only came about after we got preferential treatment of long term capital gains and some punitive taxation of excessive compensation, leading companies to adopt incentive stock option programs which people cheered as good for shareholders but have sharply driven up the inequality issue. This is pertinent as an example of the unintended consequences point i was making about so much of tax policy.

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