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21st Century Tax Policy and Aging Populations

Author: Michael W. Hodin, Adjunct Senior Fellow
April 25, 2012
Huffington Post


Now we've all paid our taxes and, hopefully, avoided those automobile accidents that only make tax day worse. And even if you're one of the lucky few expecting something back, the whole ordeal is still a big headache. Tax regulations are on a nonstop march into baffling complexity and the political chatter around the so-called Buffett Rule is more theater than policy. Nor has Romney's latest specifics about the deductions he'd cut generated much other than the predictable partisan banter. But it's mostly the future which is so worrisome. If you look at the inevitable 21st century trend where more and more Americans will be over 60 -- that longevity we achieved in the 20th century combined with increasingly low birth rates -- tax and spend policies will have to profoundly shift if we are to avoid burdensome, confiscatory rates on those in the traditional working population.

Here's where we are today: For every dollar we spend on a child, we spend $2.40 on an over 65er. And if the $68 billion budget on education seems generous, it pales next to the $480 billion annual price tag for Medicare. According to the Brookings Institute, this lopsided spending is only going to increase in the coming years, "rising to 7 to 1 if looking just at the federal budget."

That does not compute against 21st century demographics, unless we profoundly alter the policy approach. 700% more spending on the elderly than children? Of course, you justify 700% more spending on seniors than children if you are operating on paradigms that posit the aging as dependent, needful and socially and economically obsolete. If Boomers want to continue the proud national tradition of handing off a better America to each generation, then it's time to rethink what it means to age. If Boomers are going to take from their grandchildren at a seven-to-one clip, then there's not much prosperity on the horizon. Especially if we continue to assume a growing tax burden on those who are traditional working age.

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