Senior Citizens Get Ready for a Massive Tax Increase

Like corporations, the attitudes of political parties often reflect the attitudes of their leadership. During the Clinton years we learned that parsing words could be a fine art that allowed you to escape apparent responsibility for your acts. (You will remember that Pres. Clinton had difficulty remembering what “is” is, or whether oral favors from Monica Lewinsky constituted “sex with that woman.”)

That kind of double talk and parsing of words has continued among Democrats (and in some instances is being increasingly used by some Republicans.) It is particularly true when it comes to the Democrats discussing tax policy in an election year. The common theme of the Democrats this year is that they are not going to raise taxes except on the very rich. I’m never quite sure who the Democrats believe are the “very rich” and quite frankly they move that term around to “cover” whatever tax increase they are proposing.

But the fact of the matter is that the Democrats are proposing a massive tax increase. However, they say it isn’t a tax increase; rather, it is just the expiration of the Bush tax cuts. I was raised in a small town in Eastern Montana and where I come from if it walks like a duck, swims like a duck and quacks like a duck, it most probably is a duck. If the rate you pay in taxes next year is more than the rate you paid this year, we call that a tax increase.

I realize that those of us born, raised or living in small towns and rural areas are not as smart or sophisticated as the Washington elites, but we do know bulls**t when we see it and when we hear it.

In this instance, the group of people who are likely to get hit the hardest are the ones least able to afford it — senior citizens on fixed incomes. Yes, yes, I know that the Democrats profess to be the party that cares the most about our senior citizens but their actions demonstrate either a remarkable indifference to the lives of retirees or an ignorance on how senior citizens pay to make ends meet.

Senior citizens who rely solely on monthly social security payments are confined to a life of near poverty. For most senior citizens, they live on a combination of social security payments, pensions and their investments. Pension plans are funded by investment of employee and employer contributions in stocks, bonds and other securities. Those stocks pay dividends and realize capital gains when they are sold.

On January 1, 2009, unless the Democrat Congress acts, the tax rates for capital gains will double from ten percent to twenty percent, resulting in a ten percent loss in income to retirees dependent upon selling their investments. On January 1, 2009, the tax rate for dividend income will increase from fifteen percent to the rate of ordinary income resulting in an additional loss of income to retirees dependent upon dividends from their investments. The difficulties of absorbing the increases in the cost of living are about to be compounded by an increased tax burden.

For most retirees there is no means of replacing that lost income short of returning to the work force. The passage of time has not diminished the skills of retirees in many instances but the current demands of jobs equivalent to what they held before have advanced beyond those skill levels. Re-entering the workforce, in many instances, requires hard work and minimum wage positions — an unfortunate indignity imposed by those who profess to be their champions.

One wonders whether the Democrats care about the senior citizens or just about government and feeding the voracious appetite of government.
But the final indignity comes for those senior citizens who have worked hard all of their lives to build a small business or to sustain their farm or ranch. On January 1, 2011 the estate tax rate will increase from 45% to 55% and the amount exempt from the estate tax will decrease from the current level of $3.5 million to less than $1 million. (Currently, the amount of one’s estate exempt from taxation is scheduled to be unlimited at the end of 2009. Practically speaking, this means the difference between dying on December 31, 2010 and January 1, 2011 can mean 55 percent of your estate.)

I don’t care what “is” is, I don’t care whether oral favors constitute “sex” but I do care about a practiced lie by the Democrats that is about to cost taxpayers billions of dollars and hit the senior citizens the hardest. A tax increase is coming if the Democrats retain control of the Congress and a Democrat is elected as president and parsing of words doesn’t change that result.