Obama's Best Plan Yet: No Taxes for Seniors

By Jeralyn, Section Elections 2008
Posted on Tue Aug 12, 2008 at 07:40:00 AM EST
Tags: Barack Obama, 2008 (all tags)

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Sen. Barack Obama has relased his first plan I'm on board with: no income tax for seniors making less than $60,000 a year.

Critics say the seniors would be getting too much of a break because of Medicare and Social Security.

Seniors can't live on Social Security and Medicare alone. And if they have to go into a nursing home, Social Security doesn't pay for that. A typical nursing home in Colorado is $6,500 a month just for room and board. Medicare picks up some therapy and medication, but that room and board is a huge amount of money to pay. The only break is if you end up in the nursing home after a medical injury and need rehabilitation, which runs about $10,000 a month, Medicare pays for 120 days. Then, you are on your own.

Medicaid only helps if the people are poor, in which case they likely won't owe income tax anyway.[More...]

There is going to be an acute shortage of funds to house our increasing aging population. A tax break is an excellent idea.

Obama says:

If you work hard and pay into the system, you've earned the right to a secure retirement," says a description of the plan on the Obama campaign's Web site. "But too many seniors aren't getting that security, even though they've held up their end of the bargain. Lower- and middle-income seniors are struggling as their expenses on health and energy skyrocket while their incomes do not keep pace."

Other parts of Obama's plan:

He proposed new tax break for seniors is one of about a dozen tax changes proposed by Obama, including raising rates on people making more than $250,000 a year; extending most of the rest of President Bush's tax cuts; subsidizing Social Security and payroll taxes for low-income workers; and boosting income and child care tax credits for low-income workers.

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Obama's Best Plan Yet: No Taxes for Seniors | 43 comments (43 topical)

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I wonder why he changed his plan a bit? (5.00 / 1) (#1)
by cmugirl on Tue Aug 12, 2008 at 06:21:40 AM EST

Months ago he was touting for $60,000 and under.

And, lieberl think tanks and the AARP don't like it

From LA Times Article (5.00 / 6) (#4)
by MO Blue on Tue Aug 12, 2008 at 07:00:30 AM EST

"The proposal would exempt comparatively well off, though not affluent, senior citizens from tax and give them a benefit not generally available to working Americans," said the Tax Policy Center paper. It "helps only those low-income seniors who currently pay income taxes. Those too poor to owe any tax -- arguably those most in need -- would get no benefit."

This proposal, IF actually adopted and passed by Congress, would make me tax free but as stated above would do nothing for those who are actually in need. I'm definitely not rich, but I do not have to choose between food and medicine etc.

Think it would be better to implement something that would help the neediest and help those with sustained care needs through full tax deductions and possibly tax credits.


Am amused by the comment (5.00 / 2) (#12)
by Xanthe on Tue Aug 12, 2008 at 09:11:27 AM EST

in that article that our children are grown and we have no obligation to them.

Hello - thanks to NAFTA and its progeny - our children are under or unemployed. Among my other obligations - I often give my adult son financial help. And I'm not the only one or so I hear.


: You are not the only one (none / 0) (#15)
by CST on Tue Aug 12, 2008 at 09:21:14 AM EST

And we appreciate your help :)
You bring up a good point. Who is more at need? People on social security, or people paying for social security?
I really hate election year politics, it's always about who will cut the most taxes and add the most to the deficit. And they all pretend that they can cut taxes AND balance the budget.
The Iraq war is expensive, but even ending that won't get us where we need to be financially.
This is a good pander though, seniors at least show up to vote... sigh...

Ok, I can really spell - I promise!! (NT) (none / 0) (#2)
by cmugirl on Tue Aug 12, 2008 at 06:22:21 AM EST

Like most tax cuts (5.00 / 7) (#3)
by Steve M on Tue Aug 12, 2008 at 06:42:04 AM EST

This is bad policy that will get a free pass because it's politically popular to offer free giveaways.

I know Obama doesn't want to be seen as a "tax raiser" but here's the thing, the deficit is a major problem and all this progressive stuff we want to do like health care reform is going to cost money.

Of course I'm not eager to increase the burden on low-income folks, the working class, etc. But the idea that somehow, people making more than $250,000 are going to finance the entire budget and everyone else is going to get tax cuts out the wazoo is just crazy. In my book we've already cut taxes to the bone unless we're prepared to fundamentally reinvent the purpose of government in a conservative direction.

No kidding? (5.00 / 4) (#6)
by RalphB on Tue Aug 12, 2008 at 08:03:24 AM EST

And how is this going to work out well with huge deficits?

extending most of the rest of President Bush's tax cuts; subsidizing Social Security and payroll taxes for low-income workers

Thought those Bush tax cuts were going to be allowed to expire?

Even so the tax break for retirees, which is the main point of this post, does nothing for low income retirees who need the most help. This just seems like a feel good jumble, not much of a plan.


: Deficits.... (5.00 / 2) (#16)
by kdog on Tue Aug 12, 2008 at 09:35:54 AM EST

we could abolish the DEA and DHS, along with other ineffectual and unnecessary bloated bueracracies to trim the deficit...and give people a break on taxes. If that's not enough we can signicantly reduce defense speeding.
Everybody wins...except the Beltway teet-suckers, leeches, and con-artists that is:)

Many of my acquaintances and (5.00 / 4) (#5)
by Xanthe on Tue Aug 12, 2008 at 07:25:00 AM EST

friends (even) are resentful that I get a free pass on mass transportation in Illinois. This won't sit well with people struggling (and I agree with them.) A few things though: I pay high real estate taxes; I pay medicare and a high supplemental and that incredibly goofy drug monthly bill - I pay over at least $700 a month (including re taxes). It's not free - nothing is free. But I am happy to have Medicare - they better start issuing good night pills if the system goes bye-bye.

and my house is not paid for - I am a victim of Chicago development and was forced to leave my paid up home because the million dollar plus homes are now that neighborhood's norm.

Maybe Obama reads he's not doing well with seniors and this is a pander - which will be pulled or "refined." Another thought: bad year in the market so many seniors won't be paying taxes this year - or should I say less taxes.

Forget this idea and keep Medicare strong - that's one senior's opinion.

This is one of those plans that (5.00 / 7) (#7)
by Anne on Tue Aug 12, 2008 at 08:03:28 AM EST

has the potential to further squeeze the middle-class taxpayer unless all elements of Obama's tax plan are passed. He's shifting everything to the over-$250K crowd, counting on them to pick up the tab for what amounts to a tax cut for seniors, and a tax cut for the middle class. I am imagining the fight that will ensue in Congress, Obama's penchant for "compromise," and the Dems' inability to hang tough and thinking that what could be the end result might be something that does little to help anyone.

: You nailed it: (5.00 / 2) (#8)
by Xanthe on Tue Aug 12, 2008 at 08:22:04 AM EST

his "penchant for 'compromise'" and the "Dems' inability to hang tough." Plus there may be some goodies the Republicans will add to any such bill.
Wholesale craziness.

I (5.00 / 2) (#9)
by tek on Tue Aug 12, 2008 at 08:32:01 AM EST

don't see what's so great about it. If you make over 60,000 then you have to pay for the shortfall from the people who don't and also pay for the expanded Faith Based Initiative, the Neighborhood Project, and all of Obama's other big money giveaways. By the time you get done handing out money to all the relatives who don't have health insurance or jobs because the economy's terrible from spending too much money that isn't in the Federal Treasury and because you're the only people in the family who have been successful, you can never retire.

Sounds like another vote buying scheme to me.

It is a vote buying scheme, and it stinks (5.00 / 2) (#18)
by Roz on Tue Aug 12, 2008 at 10:01:56 AM EST

Granted, I haven't delved into the details of this tax cutting plan, but on its face, it seems patently unfair, discriminatory, fiscally irresponsible. I hate it.

Why should a senior retiree making $50,000, who owns their house outright, has no dependents to support, receives medicare benefits and a nice package of age-based discounts pay less income tax than a single mother making of 4 school aged children has to support her family and pay for their college education on a $40,000 salary?

And those kids are going to be left with one hell of a tax burden in order to give relief to seniors who don't need it. Urg!


Roz (5.00 / 3) (#20)
by Xanthe on Tue Aug 12, 2008 at 10:22:58 AM EST

I agree with you but read my posts upstream. Medicare costs - we don't all own our own homes - and many of us are helping others financially. As well, we pay high real estate taxes. What age based discounts? 10% on clothing on Wednesdays - hell, I hit the resale shops.

There is a bit of meanspiritedness about your post - but as I said I agree with you basically. Most especially about the resentment.


Means testing not mean spirited (5.00 / 1) (#37)
by Roz on Tue Aug 12, 2008 at 07:49:37 PM EST

I'm not mean spirited about it, nor do I mean to direct my ire at the beneficiaries of such proposed tax breaks. But I do feel strongly about it, and pandering politicians wrecking fiscal havoc for future generations make me angry.

Of course not every senior fits the scenario I gave. My point was that those that do should not be given preferential tax treatment over younger citizens who have less resources but more expenses.

I think its preferable to base income tax on income level rather than age, sex, race, etc., and then offer tax deductions and credits to meet social needs and goals.


: As I said - (none / 0) (#38)
by Xanthe on Tue Aug 12, 2008 at 08:09:58 PM EST

point taken.

I tell you who needs the money.... (none / 0) (#19)
by kdog on Tue Aug 12, 2008 at 10:21:03 AM EST

the least. Uncle Sam...that's who.

I'm not prepared to tell the elderly person making 50k, or the single mom making 40k, or the insurance salesman making 150k that the DEA needs their hard earned money more than they do...by threat of arrest or violence.

Before we decide a fair income tax rate, or even if the federal govt. requires an income tax at all...we need to get the out of control drunken sailor federal spending under control. A fair tax rate simply cannot be determined until we know how much cash the govt. needs to function every year. Not how much they want, or how much they can collect without a revolt...but how much the country needs.

It's no easy task...ya gotta go line by line and ask "is this absolutely necessary?..is it just to take the fruits of other's labor to pay for this?".

I think we'd be amazed at how we could get federal spending reduced to but a fraction of what it is...but our elected officials have no incentive to reduce the size and scope of the federal govt, then they'd have no cushy govt. jobs or contracts to hand out to their cronies...and there is the rub. We have to demand it.


Oh (none / 0) (#10)
by tek on Tue Aug 12, 2008 at 08:33:14 AM EST

and then he's going to privatize Social Security and cut Medicare out of the budget (his own words that liberal don't like to acknowledge) you have to work until you keel over.


: tek - Don't doubt the SS privatization - (none / 0) (#14)
by Xanthe on Tue Aug 12, 2008 at 09:14:17 AM EST

but could you document the Medicare comment. I've not seen such a statement.

Mixed feelings about this. (5.00 / 2) (#26)
by oldpro on Tue Aug 12, 2008 at 01:09:38 PM EST

Another way to divide old and young and it's bad enough as it is.

$60,000 seems pretty high...how about $30,000 for an individual and 50,000 for a couple pay no income taxes?

The bit of extra money would be good for those of us who don't make much but pay income tax as well as state and local sales and property taxes...which are pretty high. Seniors already get big breaks on local property taxes if they apply for them. I never do for that only shifts the collected tax burden to young families with children.

We seniors get many other discounts...from travel to restaurants, films, etc. In fact, it's so pervasive that seniors have begun asking for senior discounts for senior services! Please. People! We 'we' expect it...feel entitled to it. Makes me ashamed of the petty selfishness I see all too often among my peers...

The greatest gain in 'no incometaxes below X dollars' is that we could stop turning us all into bookkeepers!! Drives me nuts. Nuts, I tell you!

I am more than a little concerned (5.00 / 4) (#27)
by BrianJ on Tue Aug 12, 2008 at 01:20:32 PM EST

About the fiscal impact of these plans.

Obama's plans would add $3.4 trillion to the national debt over the next 10 years, according to the Tax Policy Center, even before this plan. He's still better than McCain $5.0 trillion added, I should hasten to mention, but we cannot keep adding willy-nilly to our debt this way!

Bad math (5.00 / 2) (#28)
by tree on Tue Aug 12, 2008 at 01:43:03 PM EST

If it costs $6500 a month for a nursing home, that's an outlay of $78 thousand a year. A tax break of 12 to 18 thousand isn't going to make a nursing home affordable. Its the wrong answer. Bad policy, bad pander.

I don't understand (5.00 / 2) (#29)
by reslez on Tue Aug 12, 2008 at 01:45:54 PM EST

what fiscal or societal merit this idea could possibly have. Why have a tax cut for a particular age group? Shouldn't the real target be poverty -- people who have trouble making ends meet, regardless of the year they were born? This smacks of cynical politics at its worst. If the argument is that seniors are poor, the truth is seniors as a group are the wealthiest segment of the population. Many seniors struggle, that is a plain fact. But the poorest group is children. If we are going to exempt anyone from taxes it had better be families with children struggling on the margins of poverty.

: Also, (5.00 / 2) (#30)
by reslez on Tue Aug 12, 2008 at 02:02:23 PM EST

this seems like a solution for some other problem than the ones mentioned. If the point is that nursing homes are expensive, then the solution is to expand Medicare coverage of nursing homes. Or smarter yet, fix our health care system so that families and federal government alike aren't bankrupted by the cost. If the point is that seniors can't live on Social Security alone, a more sensible solution is to increase payouts.
It's ironic that a candidate who rose to prominence as the voice of the younger generation is now proposing a boondoggle that would squarely place most of the tax burden on them. Most people of my generation believe Social Security will not be there for us. Most of us believe we will not be able to retire. Is this how Obama intends to thank his strongest supporters?

: How about anyone (5.00 / 1) (#31)
by nycstray on Tue Aug 12, 2008 at 02:34:28 PM EST

struggling on the margins of poverty?
Do I need to pop out a couple of kids to count for anything until I become a "senior"?

Dumb. (5.00 / 6) (#33)
by Jake Left on Tue Aug 12, 2008 at 04:11:49 PM EST

That's from a senior. Aside from the fiscal silliness of it, there is the political gaffe. Sure, greedy seniors will think this is swell. But is will give a huge block of those in the under 50 pause. There is already a great deal of resentment towards us boomers. This will lose him votes from the group he needs. The heavily republican seniors that he wants already make more than $50K.

This is just election year pander promising. It's unsightly and embarrassing. My $38K goes just as far as $38K from someone thirty years old. Sure I have pharmacy bills and a few more medical bills but I don't have day care and commuting costs. My heating bills are just like theirs. Smart seniors will not think this is a good thing as it throws more costs on their children and grand children.

So sad.

The retired seniors are that demographic (5.00 / 2) (#40)
by JavaCityPal on Tue Aug 12, 2008 at 09:15:47 PM EST

Obama is having a huge problem capturing. I don't know one person over 70 who has said they will vote for him. In fact, my parents and all their friends and senior relatives are saying the very same thing....they are sitting this election out. My uncle mentioned last month when he was visiting that if his dad was still alive to see this, he would be so ashamed of the party.

It is a pander of the worst kind. He not only won't put much effort into seeing it happen, he won't be able to get the necessary support to get it through. This should have been presented during the debates, and a primary policy on his platform all along if he wanted anyone to believe it.

He is visiting his elderly grandmother. Maybe it was her idea.

I would like to know the % of people (none / 0) (#11)
by BarnBabe on Tue Aug 12, 2008 at 08:54:06 AM EST

Maybe this is why they think the seniors will follow him. But, when I first read the diary I was, sounds good. But, then I am thinking and do not see a advantage for me.

I know the costs of a nursing home, because I did have to pay for one for 6 weeks. It was my Mom's money, but that was a huge chunk all because she had some. Medicare/Medicaid will pay for it as long as you do not have money. If you do have money then it takes and takes until you are broke enough for them to kick in.

I would like to see the percentage of people who would get relief on this.

and now, just yesterday (5.00 / 1) (#13)
by TimNCGuy on Tue Aug 12, 2008 at 09:13:28 AM EST

I heard a report on NPR that Assisted Living Centers are dropping medicaid recipients because the payments received from medicaid are too low to cover the costs.

I don't know if this also applies to nursing himes. But, if it does, it means that those people poor enough to rely on medicaid, will only be able to find room in the worst of facilities that are willing to accept them for the small amount that medicaid is willing to pay.


Soylent Green--that's the ticket! Or, get your (none / 0) (#21)
by jawbone on Tue Aug 12, 2008 at 10:23:08 AM EST

suicide pills before the Web pharmacies are shut down and hold your stash until your money runs out.

Story on huge price increase in cost of heating oil, nearing $5/gallon, said one retiree's entire SocSec checks wouldn't cover her heating oil during the winter months.

My mechanic sees $6/gal for heating oil. Says it tracks diesel and diesel had been running more expensive than gasoline. That was before the recent dip in oil futures price per barrel, however.


: My retirement savings are going at a very high (5.00 / 0) (#22)
by jawbone on Tue Aug 12, 2008 at 10:26:14 AM EST

rate to Aetna every month--and I can't change plans bcz of a preexisting condition (cancer, which requires expensive yearly tests to monitor). Can't even more out of state until I get on Medicare.
Gotta luuuuv this great American healthcare system.

: It was $4.40 a few weeks ago (none / 0) (#24)
by BarnBabe on Tue Aug 12, 2008 at 12:28:30 PM EST

Heating oil right now is $3.929 which is the lowest since May.

Medicaid food for thought. You can have money (none / 0) (#17)
by Saul on Tue Aug 12, 2008 at 09:53:05 AM EST

Yes nursing homes cost a bundle. Sooner or later we will end up on one unless the family is the full caretaker. You can have money and still qualify for medicaid but you need to transfer your assets over to someone in your family if you have someone. There is a 36 month look back period that medicaid looks at. In other words you cannot transfer all your assets one day and say ok now I qualify for medicaid. You have to wait 36 months after you transfer the assets then you can qualify for medicaid. This was the look back period several years ago. I am not up what the current situation is today.

: I think it differs by state (5.00 / 1) (#23)
by Jeralyn on Tue Aug 12, 2008 at 11:00:13 AM EST

as it's 5 years in some places, but anyone reading should not rely on comments here but check with an accountant or lawyer specializing in these matters.
As for stats on the number of people in nursing homes, see here. In 2006, it was 1.9 million.

: In Ohio it's 60 months..... (5.00 / 1) (#34)
by sallywally on Tue Aug 12, 2008 at 05:46:47 PM EST

My sister and I are trying to work our finances to work with this.

Hey, wait a minute! (none / 0) (#25)
by Ennis on Tue Aug 12, 2008 at 12:31:36 PM EST

I thought Obama had no specific plans.....?

Oh, now I remember...he has plans, but you can't trust him to implement them.

Anyhow, this is a very good one, and it's going to help him a lot with older voters.

: It is not a plan (none / 0) (#35)
by Wile ECoyote on Tue Aug 12, 2008 at 07:16:39 PM EST

it is a goal. The plan leads to the goal.

: I'm not sure it will help (none / 0) (#39)
by Xanthe on Tue Aug 12, 2008 at 08:16:05 PM EST

him with older voters. Anyway, it wouldn't pass - and he'll look like he tried/or so he thinks. He wants the older vote - this won't work with thoughtful seniors.

Good for him! (none / 0) (#32)
by scdemocrat on Tue Aug 12, 2008 at 02:46:36 PM EST

Obama has so many great ideas. I just hope that we can all spread the facts and encourage everyone to get out and vote so we can make a difference in the way our country is ran.
Check out my blog!

No tax for the takers, (none / 0) (#36)
by Abdul Abulbul Amir on Tue Aug 12, 2008 at 07:39:54 PM EST

but more taxes on the makers.

Just a dumb pander...and wrong to boot. (none / 0) (#41)
by Romberry on Wed Aug 13, 2008 at 01:41:24 AM EST

Why on earth should seniors making 60 grand have to pay no tax at all? If it's good for seniors, why isn't it also good policy for wage earners, many of whom have incomes well under 60 grand and are also saddled with the expenses of commuting to work, work wardrobes, expensive health insurance and on and on and on? No...this is a pander and bad fiscal policy to boot.

The tax structure at different levels of wages and income should apply to all who are those levels of wages and income in exactly the same way. This smacks of a blatant attempt to buy votes and for all the world sounds like something GW Bush would use. No thanks.

: Can't edit so let me add this... (none / 0) (#42)
by Romberry on Wed Aug 13, 2008 at 02:00:32 AM EST

This isn't a plan for seniors living only on Social Security. (Medicare is an expense, not income, so I will ignore that part.)
The current monthly maximum Social Security benefit is $2185.00, far short of 60 grand. In addition, for seniors whose income is entirely or almost entirely from Social Security benefits, those benefits are already not generally subject to federal income tax.

Other tax cuts planned? (none / 0) (#43)
by Batman on Tue Oct 14, 2008 at 10:23:35 PM EST

Across this nation, there are also people with disabilities who want to live independently in the community. Within that portion of the population, I believe there is a rather large sized portion of people with disabilities, especially those of high function, who prefer to own a house instead of renting an apartment. One very massive barrier to independent living for persons with disabilities is high property taxes, especially considering that the sale price of an average single family home is practically useless in predicting how much in property taxes the person will pay. For example, a house that could be selling for $50,000 could have a taxable value of $175,000 or even as high as $200,000. Not to mention other things, especially large city projects, like for instance, paving new roads and sidewalks or construction of new modern buisnesses, highrises, etc can cause property taxes to go way up. This is an especially troubling situation especially for those on low fixed incomes, such as SSI and Medicaid. If Obama really might like cutting taxes, I think whoever reads this post should mention it to Obama and Biden.