YOUNG AND OVERTAXED ? A PRESCRIPTION FOR RUIN
By
Mark Schmidt
The House recently passed a $350 billion prescription drug entitlement for seniors.
Thankfully, the plan faces limited chances of success in the Senate ? not because it costs too much at a time when deficits have re-emerged, but because it spends far less than the $800 billion that Democrats want.
The lack of debate over whether such a massive give-away is necessary in the first place demonstrates seniors? electoral clout: according to the Federal Election Commission, while 61% of those over the age of 65 voted in the 1998 Congressional elections, only 18% of those age 18-25 did.
In sheer numbers, there are five times more votes to be found among the elderly ? and they want ?free? drugs.
The younger generation?s lack of political influence ? childless singles in particular ? leaves them stuck with the bill for an ever-expanding welfare state even though they consume almost none of its services.
For example, National Taxpayers Union Foundation research shows that per capita federal entitlement spending on seniors totaled $17,637 in 2000, while entitlement spending on Americans aged 18-64 amounted to just $1,845 per person.
Seniors aged 65 and over devour almost 60 percent of the federal entitlement pie, while the much larger cohort of the population aged 18-64 nibbles on a lean 28 percent. Because Food Stamps and welfare go largely to single mothers, childless young singles receive almost none of this latter amount.
Social Security is a raw deal for the young. While a worker born in 1915 who retired at 65 in 1980 collected $71,390 more than he paid into Social Security, a worker born in 1975 can expect to collect $93,486 less than she contributed.
Young people benefit from fewer tax deductions. Only 46% of those age 25-34 are homeowners, and thus eligible to deduct mortgage interest, while 80% of those age 65 and older own their homes. Even after many seniors pay off their mortgages, they can still deduct applicable property taxes.
About the only big deduction that young singles get is for interest on student loans, but this break phases out if you work hard enough to make $40,000 a year. And tuition has risen at three times the rate of inflation since big government flooded the market for college loans.
The unspoken truth is that young Americans ? many of whom are struggling to pay off educational debt and want to save for a home, marriage, and a family ? are being forced to make an intergenerational wealth transfer to more-affluent seniors.
Indeed, the average net worth of seniors age 65-74 is $146,000, while the average net worth of Americans under age 35 is a mere $9,900. Government-mandated wealth-transfer policies are one factor in this disparity: over the past four decades, federal entitlements to the elderly grew almost twice as fast as they did for Americans under 65.
Why should a hard-working young person pay taxes so a rich old person can play golf or pay less for his Viagra prescription?
The answer is that politics is almost always a zero sum game. Assuming government needs a set amount of revenue to fund its existing web of entitlements, a new entitlement for one group means higher taxes for another group.
Thus, the politicians push where there is the least resistance ? or the least votes ? and that means the entitlement burden falls disproportionately on young people, whose level of participation in politics is abysmally low.
It?s not surprising that the elderly strongly favor a prescription drug entitlement program. It?s an easy way for them to shift costs to younger taxpayers who are already footing the bill for Social Security and Medicare, as well as federal, state, and local taxes from which many seniors are exempt.
Although politicians such as Senator Hillary Clinton claim that a new prescription-drug entitlement is ?an investment in Medicare,? young taxpayers should understand that they are unlikely to ever receive any dividends from this budget-busting scheme.
During the early 1990s young people were urged to ?rock the vote.? If the prescription-drug entitlement becomes law, they will pay an even higher price for failing to do so.
By
Mark Schmidt
The House recently passed a $350 billion prescription drug entitlement for seniors.
Thankfully, the plan faces limited chances of success in the Senate ? not because it costs too much at a time when deficits have re-emerged, but because it spends far less than the $800 billion that Democrats want.
The lack of debate over whether such a massive give-away is necessary in the first place demonstrates seniors? electoral clout: according to the Federal Election Commission, while 61% of those over the age of 65 voted in the 1998 Congressional elections, only 18% of those age 18-25 did.
In sheer numbers, there are five times more votes to be found among the elderly ? and they want ?free? drugs.
The younger generation?s lack of political influence ? childless singles in particular ? leaves them stuck with the bill for an ever-expanding welfare state even though they consume almost none of its services.
For example, National Taxpayers Union Foundation research shows that per capita federal entitlement spending on seniors totaled $17,637 in 2000, while entitlement spending on Americans aged 18-64 amounted to just $1,845 per person.
Seniors aged 65 and over devour almost 60 percent of the federal entitlement pie, while the much larger cohort of the population aged 18-64 nibbles on a lean 28 percent. Because Food Stamps and welfare go largely to single mothers, childless young singles receive almost none of this latter amount.
Social Security is a raw deal for the young. While a worker born in 1915 who retired at 65 in 1980 collected $71,390 more than he paid into Social Security, a worker born in 1975 can expect to collect $93,486 less than she contributed.
Young people benefit from fewer tax deductions. Only 46% of those age 25-34 are homeowners, and thus eligible to deduct mortgage interest, while 80% of those age 65 and older own their homes. Even after many seniors pay off their mortgages, they can still deduct applicable property taxes.
About the only big deduction that young singles get is for interest on student loans, but this break phases out if you work hard enough to make $40,000 a year. And tuition has risen at three times the rate of inflation since big government flooded the market for college loans.
The unspoken truth is that young Americans ? many of whom are struggling to pay off educational debt and want to save for a home, marriage, and a family ? are being forced to make an intergenerational wealth transfer to more-affluent seniors.
Indeed, the average net worth of seniors age 65-74 is $146,000, while the average net worth of Americans under age 35 is a mere $9,900. Government-mandated wealth-transfer policies are one factor in this disparity: over the past four decades, federal entitlements to the elderly grew almost twice as fast as they did for Americans under 65.
Why should a hard-working young person pay taxes so a rich old person can play golf or pay less for his Viagra prescription?
The answer is that politics is almost always a zero sum game. Assuming government needs a set amount of revenue to fund its existing web of entitlements, a new entitlement for one group means higher taxes for another group.
Thus, the politicians push where there is the least resistance ? or the least votes ? and that means the entitlement burden falls disproportionately on young people, whose level of participation in politics is abysmally low.
It?s not surprising that the elderly strongly favor a prescription drug entitlement program. It?s an easy way for them to shift costs to younger taxpayers who are already footing the bill for Social Security and Medicare, as well as federal, state, and local taxes from which many seniors are exempt.
Although politicians such as Senator Hillary Clinton claim that a new prescription-drug entitlement is ?an investment in Medicare,? young taxpayers should understand that they are unlikely to ever receive any dividends from this budget-busting scheme.
During the early 1990s young people were urged to ?rock the vote.? If the prescription-drug entitlement becomes law, they will pay an even higher price for failing to do so.
