The Average Is Not the Typical...
Why oh why can't we have a better press corps?
Michael Kinsley writes:
The Least We Can Do: According to a survey from the Federal Reserve Board, the average American household aged 65 to 74 has assets worth more than $1 million. Typically these amounts get spent down as people get older and sicker, so let’s say the second member of the typical couple dies leaving $500,000...
Notice the slippage?
As Steve Heston emails, the 2007 Federal Reserve Survey of Consumer Finances http://www.federalreserve.gov/pubs/bulletin/2009/pdf/scf09.pdf reports that the average wealth of a family with a head 65-74 was $1.015 million in 2007 (it is less now). But the median family with a head 65-74 had $239 thousand--in short, they owned their house and perhaps $100 thousand more.
This matters because MIchael Kinsley is calling for a broad-based low-rate estate tax:
The Least We Can Do: In 2009... the estate tax... up to 45 percent on estates worth more than $3.5 million, and raised only $25 billion—in other words, only a small proportion of the population paid it, but the few who did pay really got socked.
This would not be what I am suggesting here. I am suggesting a tax... [on] anyone who inherits any significant amount of money--but at a much lower rate....
Here is another justification for taxing the money people leave behind when they die.... [F]or years, this couple has been collecting benefits from Social Security and Medicare. These are supposed to be insurance programs. Social Security protects you against the risk of being old and poor.... But if a couple dies leaving assets worth half a million dollars, the risk they were insuring against—poverty in old age--evidently didn’t materialize. The money they received from Social Security... is instead passed along.... Why shouldn’t they give it back? Or some part of it? Social Security sent out checks worth $682 billion last year, so there is real money here...
And Kinsley is under the illusion that the typical American elderly couple has four times the bequeathable wealth that it does.
The art of tax policy is, as Colbert said, to collect the most feathers with the minimum of hissing. And in order to do that you need to know where the feathers are, and how many of them there are.
