In order to consider tax policies for the future, it is helpful to look at some of the information that has been produced by the Congressional Research Service for Congress about the current status of elderly in America. A recent report by Debra Whitman and Patrick Purcell looked at Topics in Aging: Income and Poverty Among Older Americans in 2004 (Nov. 7, 2005). A few of the statistics from the report are worth noting.
- Median income of individuals 65 and over is only $15,199
- For the 65 and older set, the advantage men have in the work world during their working years continues to hold true during old age: men had a median income of $21,200 while women had a median income of only $12,079
- The same is true for African Americans: older African Americans have only 71% of the total income that older white Americans have.
- 28% of individuals 65 and over made less than $10,000 in 2004
- Only 10% of those 65 and over made more than $50,000 in 2004
- Social Security is the largest single income source among the aged
- For 69% of those recipients, Social Security constitutes more than half their income
- For 39% of those recipients, Social Security constitutes more than 90% of their income
- For elderly in the bottom income quartile with less than $9,390 in total income, 86% of that income is from Social Security, less than 5% is from savings and only 2% from pensions
- The median private pension benefit received in 2004 was only $6,720
- Most elderly Americans receive only small amounts of income from investment assets that they have saved: half received less than $952 from interest, dividends and other investment income
- For workers 65 and over, media earned income was $15,000
- Poverty has declined for the elderly, though one in ten elderly persons still have income below the poverty threshold (defined for couples at least one member of which is 65 or older as $11,418).
- Women, minorities, less-educated and elderly over the age of 80 are more likely to be poor
- The eldest of the elderly are also the worst off: compared to those 65-69, persons 80 and over have bout $9,000 less in earnings, $6,000 less in public pensions, $3888 less in private pensions and $100 less in asset income, $336 less in Social Security income
The fact that fewer elderly have incomes below the official poverty level should not give us much solace. Many of these are the "near-poor" who have incomes just barely above the poverty threshold. One quarter of American elderly had family incomes below 150% of the thresholds, and 38% had less than twice the poverty thresholds ($18,120 for a single person, $22,836 for a couple). It is hard to imagine how a typical elderly couple, with increasing medical bills and generally increasing costs that have to be paid out of fixed incomes, manage at all on just over the official poverty rate of $11,418. Rent for even a small apartment, food, transportation, clothing, and medical needs could easily gobble up that entire income, leaving precious little to sustain a medical or other emergency.
As this Congress contemplates its budget cuts for the poor and tax cuts for the wealthy and upper middle class, it would do well to reflect on the importance to a good society of an elderly population that is integrated into the community, has access to health care that permits life-extending and life-expanding possibilities, and has a supportive network of family, friends and government agencies to ensure that no one is left behind. This is the essence of what democratic egalitarianism requires--that each individual in society be treated with respect and have available for support the means to live a decent life.
Ultimately, the need to ensure that elderly Americans are adequately provided for, like the need to provide health care for the one in four American children that are outside the safety net, must take more prominence in the national debate than it has to date. That means that it may be necessary to increase the Social Security tax by raising the cap (perhaps including all capital gains as well as labor income) so that those millions of senior citizens who depend primarily on their Social Security check can have enough to meet their basic needs, including health care. That means that we should cut back on excessive military spending supporting a global network of military bases in order to have the resources to care for ordinary American citizens at home. That means that we should enact pension reforms that ensure that pensions created during a worker's working life are there when he retires. If it demands requiring increased funding of pension plans, then by all means let us do so. That means that we should recognize the importance of tax as a collection system for supporting community projects. We cannot switch to a tax system that "starves the government" but feeds the wealthy, which is what the proposal for budget cuts accompanied by tax cuts for the investor class will do. We should, in short, reconfirm our commitment to a progressive tax system that generates enough funds to help those at the bottom of the income scale.
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