Posted: Apr 24, 2005 By: John Carroll

Comment: Dear President's Advisory Panel on Federal Tax Reform:

As a self-employed business owner who spends half a week each year suffering
over tax forms, I am convinced tax simplification is long overdue, so I wish
you great inspiration and the best of political winds in completing your

My suggestion is a trade-off: Eliminate the "death tax", yes -- but only
for individuals who willingly decide to do without Social Security and
Medicare benefits.

While we shouldn't punish the elderly (or their offspring) for accumulating
assets, nor do we want the wealthier among America's growing and
unprecedentedly well-off hordes of retirees taking a free ride on social
welfare programs that were never intended to be making 30-year payouts to

In the days of the New Deal, when Social Security and Medicare were
launched, many of our comfortably-off citizens would have felt a sense of
"noblesse oblige", and most who could afford to would have refused "public
assistance" -- because they didn't need it, while the poor did. (Yes, there
was a stigma to taking "welfare" -- and, like so many stigmas that have gone
by the boards in recent decades, we'd all be better off if we could revive
that one.)

Because so many who don't need benefits take them anyway, the estate tax
should continue to be imposed (with the same or even a higher level of
exemptions) against anyone who collects Social Security for more than a
one-year trial period, or who collects Medicare benefits without paying
premiums for more than three years. During those "grace" periods,
recipients of benefits would be sent monthly opt-out forms with their Social
Security checks, and quarterly opt-out forms with their Medicare statements.
These forms, opting out of benefits in return for explicit protection from
potential exposure to the estate tax, could be executed before two witnesses
at their nearest SSA office; those needing transport could call an 800
number to schedule a free SSA pick-up to execute the forms, and there could
be a requirement that those opting out show the means to pay a certain
minimum level of medical costs.

Any "death taxes" eventually collected -- mind you, only from those who
insisted on getting their payroll taxes back in this life -- would be paid
into the Social Security and Medicare trust funds.

As any compassionate person would wish it, the elderly who have only a small
nest egg would continue to opt to receive the Social Security and Medicare
benefits that are provided for them. They would not fear the estate tax,
because they would have been given time and information to understand that
their net worth would not exceed the exemption levels.

The public interest, meanwhile, would be vastly better-served, and Social
Security and Medicare a good deal more solvent, if more wealthy retirees
volunteered to lighten the public burden. People live longer and longer.
While the well-off may sneer at how small Social Security payments are, it
rarely seems to cross their minds to refuse the checks. Perhaps both
political parties have reassured them too often that that they are entitled
to get out what they pay in. Well, yes, true enough -- but why not offer
them a choice: collect benefits, as is your right, or elect to keep your
estate intact, which is much more debatable as a "right" and certainly
shouldn't be a privilege open to someone who spends decades on the dole.

This plan would influence most retirees to think of their family's interest
as being in line with sparing the public coffers; too often, people these
days seem to think their family's best interests are *opposed* to what will
spare the public coffers.

For America's finances to be healthy for the long term, we have to stop
making the elder generation's choices seem to carry no price ticket, and we
have to stop telling ourselves that what we individually choose is not the
rightful concern of to our fellow citizens.

Best wishes,