The well worn path to prominence in New York politics is to bestow benefits on the small number of active interests already privileged by state and local policy. Then when “forced” to impose sacrifices on everyone else, even those comparatively worse off, blame “inevitable” circumstances, or the other political party.
It is three years until the next Mayoral election, and New York City Comptroller Bill Thompson has already lost my vote. Lost it by saying two words I never want to hear from any elected official or aspirant: “senior citizen.” I don’t want to hear those words not because I have anything against senior citizens; indeed, I hope to become one myself one of these days. It don’t want to hear them because today’s senior citizens have just about the greatest sense of entitlement, both in terms of what they are to receive and what they ought not have to pay, of any just about anybody on the planet. And public policy, including tax policy, already benefits them to an enormous extent – especially in New York City.
Mr. Thompson, and those with him, essential promised to send senior citizens earning less than $65,000 per year, and fortunate enough to own their homes, a check for $600. For those with equal incomes who were not seniors, he promised nothing. Like the current $400 rebate program (an eternal blot on Bloomberg’s name that grows greater every time some other sleazy pol tries to top it), and for those not fortunate enough to own homes, he also promised nothing. Nor is he apparently particularly concerned with non-seniors with $40,000 incomes, or $20,000 incomes. They, it seem, have it well enough already.
Is that so?
Imagine two couples with these circumstances.
First couple one, in their late 20s/early 30s. He works for $45,000 per year as a self-employed handyman. He could have done well as an electrician, but he was educated in New York City’s public schools after vocational education collapsed, so he is not qualified. To make ends meet, she also works for $15,000 per year nights in a store. That’s a total of $60,000. They have two children, who they are sending to Catholic school for $7,200 per year because the public schools where they live are so bad they are unconstitutional. They cannot afford a house, and all the good rent control and Mitchell Lama deals are taken, so they live in a one-bedroom apartment that they rent at a cost of $1,250 per month, or $15,000 per year. They would pay less, but landlords collectively raise the rent to cover their property taxes. Of course they cannot afford health insurance, nor contribute to a 401K, and neither has a pension. They have little if any savings.
Then couple two, age 67 and 65. They own a 2,400-square-foot home. They too have $60,000 in cash income, with $35,000 coming from a guaranteed New York City pension, which they have been collecting since he turned 55, and $25,000 from Social Security, which has been received since each turned age 62. Neither works, of course, although she worked until Social Security kicked in. They have Medicare, supplemented by private health insurance provided by the City through its benefits for retirees. Their house is probably worth $400,000 – but given the real estate bubble if they wanted to sell it right now and move to Florida, they could get twice that.
Couple one would owe taxes for Social Security and Medicare at a total rate of 7.5% on her income and 15% on his – some of which goes to provide benefits for couple two, benefits at a level that couple one will probably never see since they are not “at or over age 55.” I had planned to run TurboTax on both these scenarios to provide specific numbers for other taxes, but I’ve already deleted it from my computer for this year. Nonetheless I’m willing to bet couple one would owe at least some federal, state and local income taxes, as well as an extra unincorporated business tax on a portion of his income (I believe such income is exempt from this unique double taxation up to $30,000).
Couple two, I’m fairly confident, would owe little or nothing in income or payroll tax. Particularly at the state and local level, where pension income (unlike wage income) is exempt from income taxes, for those lucky enough to get pensions. Of course, health insurance paid for by someone else doesn’t count as taxable income either.
And property taxes? I’m not sure about the specifics, but I do know that breaks for seniors, regardless of income, have popped up across the country. Couple two already benefits because New York City’s tax code holds down taxes on property wealth, which they have a lot of, and has uniquely high taxes income, which they also have but theirs doesn’t count as such. In New York City, only one-third of all housing units have three-or-more-bedrooms, compared with two-thirds nationally. All subsidies for empty nesters to stay in large units do is make this situation even worse for families with children than it already is. When I become an empty nester myself, for example, I’ll have to take into account the higher taxes I would pay in a smaller unit if I downsize.
Oh, and don’t forget couple two pays a half fare on the transit system. No such break for couple one, or for their children once they no longer qualify as free.
In response to criticism, Thompson said seniors tend to have less income, but it isn’t really so. Whereas 40 years ago seniors were, in fact, worse off than most non-seniors, today seniors have lower poverty rates, much higher wealth, and much more secure income and health insurance, relative to those under age 65. Today’s seniors are also much less likely to work than in prior decades. Those who are young today, lacking pensions and facing a bankrupt Social Security system, will clearly have to work much longer and accept much less. Yet there is a raft of special senior benefits left over from 40 years that are not means tested, on the grounds that everyone over age 65 is assumed to be needy, everyone under 65 is assumed to be well off. None of these is questioned. Mr. Thompson wants to throw another privilege on the pile.
In short, to me everyone should be paying and getting equal – unless someone is indisputably worse off. But today’s seniors are indisputably better off than those with equal, or even lower, cash incomes. By putting their needs first – ahead of every other priority in the face of long term federal, state and local fiscal challenges what will leave all of use paying more and possibly getting less — Bill Thompson has firmly placed himself in the special interest wing of the Democratic Party, which in New York State is just about all that is left. So we can scratch one pandering pol off the list. The question is, with three years before the election, will anyone be left?