November 9, 2011 · 0 Comments
In an article on the deliberations of the supercommittee the NYT told readers that a Republican plan would raise money by charging “higher Medicare premiums for high-income people.” While the article does not give exact cutoff for high income, it is likely that is no higher than $80,000 and possibly as low as $40,000. (Many proposals for reducing Social Security benefits for “high income” beneficiaries would lower benefits for people with incomes of just $30,000.)
It is worth noting that “high income” can mean something very different when the topic is the benefits that workers get in retirement than when the topic is income taxes. Most major media outlets have run pieces questioning whether $250,000 (the floor set by President Obama for people subject to tax increases) is really wealthy.
The reason that the cutoffs for benefits cuts are fairly low is that there are few elderly households with high incomes and per person benefits are not very different for the highest income household and the lowest income household. If $250,000 were set as a floor for subjecting seniors to benefit cuts, it would save almost no money. The only way to save substantial money from this sort of means-testing is by cutting benefits for seniors that anyone would view as middle class.