Saturday, April 16, 2011

A real "death tax"...

If Farm Bureau can categorize the estate tax as a death tax, then this line of thinking surely holds up even better.

That's the understanding being challenged by Rep. Paul Ryan's "serious" budget plan. I've been trying to find the way to convey what it would mean to go back to the pre-Medicare era in which each family had to prepare for unknowably large late-in-life expenses. Merrill Goozner, on his GoozNews site, has just nowput it in the way I was looking for. He writes (emphasis added):>>Here's the real argument young and middle-aged people need to hear, and the real reason why the "more skin in the game" argument can never work for seniors or other vulnerable populations, including them when they reach that age. Seniors and the poor account for over half of health care spending. Within those groups, 5 percent of the population accounts for 50 percent of health care costs; and 20 percent of the population accounts for about 80 percent. These costs come for the most part at times when economic incentives have no influence at all on medical decision-making: in medical crises; in treating chronic conditions; and, for most Medicare patients, in the last six months of life.
That's why a voucher program for Medicare, which will shift an increasing share of those inevitable costs onto the elderly themselves, can fairly be categorized as a 100 percent estate tax or death tax. People under 55 need to know that if the plan crafted by Rep. Paul Ryan were passed, most of them will never have a cent to leave to their children. It will all go to the health care industry to support the American way of dying.<<Here's a bit of real world evidence supporting that view: Why is the savings rate so unbelievably high in China -- as much as 50 percent of the GDP? There are many reasons, crucially including exchange-rate policy. But a very powerful individual motivator is each family's knowledge that there is no Medicare-like system for their older members. Health care is on cash-payment basis there, and so every family must save like crazy against the risk that the parents or grandparents will require very expensive late-in-life care. More savings would be good for America, but that's not the right way to induce them. It's hard to believe that the Republicans will seriously embrace a plan to undo Medicare. [More]
I have been critical of the misapplication of the term "death tax" since it does not touch all (or even many) deaths. Everybody dies, but only big estates pay the tax, after all. But the power of the words have made the epithet irresistible to the wealthy as they defend unlimited inheritance. But I have to admit, this comparison strikes me as apt, so maybe the term could become co-opted, if not actually stolen.


Anonymous said...

Good comments!

Anonymous said...

Most medical expenses are spent within the last few months of a person's life. In spite of that, they die anyway.

How much is it worth to extend a person's life per day? Who is the best person to answer that? The dying, the family, the doctor, or society. Each has a financial stake.

If, I has a disinterested party, am liable for the bill, do I have a right to care about how much money is spent? Does society have a right to limit spending even if it means someone will die in 1 month instead of 2? I think it does.

Anonymous said...

I've often wondered how many family farms(or any business) were able to pass to the next generation and remain viable thanks in part to Medicare.