Vol. 29 / No. 3 / Fall 2019 IndependentNEWSLETTER OF THE INDEPENDENT INSTITUTE Give Seniors the Fairness They Deserve IN THIS ISSUE By John C. Goodman 1 Give Seniors the America’s senior citizens suffer discrimination Fairness They Deserve from several unwise government policies. Social Security recipients lose benefits if they earn even a modest amount of wage in- 2 Executive Director’s come. Their savings is often double taxed. Medicare won’t let seniors Letter consult with doctors via email or iPhone. Nor can they have a Health Savings Account to pay bills not covered by health insurance. And 3 New Book: millions lose out on Social Security and Medicare benefits they’ve Liberty in Peril worked and paid for because they can’t navigate the complexities. Here’s how America can treat seniors better: Bring Social Security into the 21st Century. Roughly 90 percent 4 Independent Institute of seniors begin collecting Social Security benefits before they reach in the News the full retirement age. Yet if they get a job and earn one dollar more than $17,640, they will lose 50 cents in Social Security benefits due 5 The Independent to the earnings penalty. Review: Is Social When Social Security’s earnings penalty is combined with the Social Security benefits tax and other taxes, middle-income senior workers Justice Just? can lose as much as 95 cents of every dollar of wages—the highest tax rate in the nation. 6 Golden Fleece® Award: These nonsensical taxes are unfair—and unnecessary. We could Housing Aff ordability abolish the earnings penalty tomorrow without any net loss of revenue Crisis for the government. Stop the double taxation of senior savings. By pushing up tax rates on pension income, IRA withdrawals, and capital gains and 7 Jordan B. Peterson on dividend income, the Social Security benefits tax also creates unfair Individual Sovereignty double taxation on savings. One way that seniors might avoid this problem is to stop making 8 Sharing Pathways to IRA withdrawals—leaving the funds until they are really needed, or Free Societies maybe passing the assets on to their children. But beginning at age 70½, federal law requires mandatory withdrawals from IRAs and other tax-favored accounts, which are then subject to punitive taxation. In a country with too little saving, too much borrowing, and too much debt, anti-savings policies make no economic sense. Bring Medicare into the 21st Century. Seniors are held hostage by antiquated laws that prevent them from talking to their doctors by phone or email, the way many non-seniors do. One way to modernize the system is to end the restrictions that prevent Medicare Advantage plans and Accountable Care Organizations from taking full advantage of telemedicine. Also, Medicare should allow for (continued on page 7) John C. Goodman is a senior fellow at the Independent Institute, President of the Goodman Institute, and author of the forthcoming Independent Institute Th e Power of Independent Th inking book, Care for America: A Better Social Safety Net. An earlier version of this INDEPENDENT.ORG column ran in Forbes, 4/15/19. 2 INDEPENDENT Executive Director’s Letter “Leave us alone so we can be together.” this arises without being dictated their own,” then the situation is ripe by bureaucrats. A free society is for the abusive extension of state like choosing your own schoolyard power. Nature abhors a vacuum. friends rather than having the Totalitarianism, whether in its teacher assign them to you. socialist or fascist forms, exploits Historically, this reflects a “classi- such vacuums. The cardinal sin cal liberal” outlook. Part of the ge- of totalitarianism is to insist that nius of this outlook is to distinguish society conform to the state and society from the state: It is not the to require that culture—indeed, role of the state (i.e., government human nature itself—reflect gov- power) to control society or to de- ernment policy. But human nature GRAHAM H. WALKER termine its features. The state can is not a creation of the state, and Executive Director stifle society but cannot create it, should not be under the thumb of At the Independent Institute, we be- because society is the flowering of the state or public policy. lieve that individual liberty—in the human freedom. Therefore lovers of liberty want context of constitutionally limited It would be a mistake to try, more than just limits on govern- government and free markets—pro- somehow in the name of freedom, ment power; we also want to foster duces great results. to liberate individuals from the influ- a society with a humane culture. Our defense of individual liberty ence of society—family, community, We celebrate the many ways that does not arise out of a philosophy faith, art, etc. That would scarcely be people provide for the common that says to the world, “Leave me human! Human dignity shows itself good without resorting to govern- alone.” Rather, we defend liberty best when we bind ourselves freely to ment—successful profit-making from a philosophy that says specif- one another in affection or at least businesses, of course, and also a ically to the government, “Leave us respect and mutual tolerance. In this multitude of other ventures like alone so we can be together.” way we fulfill the ethical framework cooperatives, philanthropies, pri- Where individuals are free and of natural law, and we forge natural, vate medical insurance pools, and government is limited, people have living links to those who went before NGOs of all kind. the incentive to engage in commer- us and to generations yet to come. Our now-classic book, The Vol- cial transactions for mutual benefit. The point of liberty is not to untary City: Choice, Community, They also have the leeway to estab- protect the individual against the and Civil Society, set forth non- lish educational, artistic, familial, influence of society but rather governmental cooperative solutions and religious relationships that are against the coercion of the state. even in areas where most people not transactional—relationships The stronger civil society is, the think only of government—such that often involve self-sacrifice for less need there is for coercive state as in urban planning, courts, po- others, especially children. All of power. Conversely, when the vol- licing, and education. At the risk of untary bonds of mutual association oversimplification, the message can weaken, and individuals are “on be distilled to one sentence: “Thank you, teacher, but I’ll choose my EXECUTIVE STAFF own friends—lots of them!” David J. Th eroux Founder, President, George B. N. Ayittey and Chief Executive Offi cer Senior Fellow Mary L. G. Th eroux Bruce L. Benson Senior Vice President Senior Fellow Sally S. Harris Martin Buerger Ivan Eland President, Saint James Place, Inc. Senior Fellow Herman Belz Vice President and Sarah A. O’Dowd Professor of History, Chief Financial Offi cer Senior Vice President, Williamson M. Evers Lam Research Corporation University of Maryland Graham H. Walker Senior Fellow Thomas Bethell Executive Director John C. Goodman Gary G. Schlarbaum, Author, The Noblest Triumph: Property William F. Shughart II Senior Fellow Ph.D., CFA and Prosperity Through the Ages Research Director and Senior Fellow Managing Director, Stephen P. Halbrook Palliser Bay Investment Management Boudewijn Bouckaert Christopher B. Briggs Senior Fellow Professor of Law, Senior Director of Publications Lawrence J. McQuillan Susan Solinsky University of Ghent, Belgium and Public Aff airs Senior Fellow Co-Founder, Vital Score Allan C. Carlson Carl P. Close Benjamin Powell David J. Teece, Ph.D. President Emeritus, Howard Center for Research Fellow, Executive Editor for Senior Fellow Chairman and CEO, Family, Religion, and Society Acquisitions and Content Berkeley Research Group, LLC Randy T Simmons Robert D. Cooter Paul J. Theroux Senior Fellow David J. Theroux Herman F. Selvin Professor of Law, Technology Director Founder and President, University of California, Berkeley Alexander Tabarrok The Independent Institute Stephen Thompson Senior Fellow Robert W. Crandall Development Editor, Books Mary L. G. Theroux Senior Fellow, Brookings Institution Alvaro Vargas Llosa Former Chairman, Garvey International Alisha Luther Senior Fellow Richard A. Epstein Manager, Marketing, Sales and Events New York University Richard K. Vedder BOARD OF ADVISORS Robert M. Whaples Senior Fellow A. Ernest Fitzgerald Managing Editor and Co-Editor, Author, The High Priests of Waste The Independent Review Leszak Balcerowicz Professor of Economics, George F. Gilder Christopher J. Coyne BOARD OF DIRECTORS Warsaw School of Economics Senior Fellow, Discovery Institute Co-Editor, The Independent Review John Hagel III, J.D. Jonathan J. Bean Steve H. Hanke Michael C. Munger Co-Chairman, Center for the Edge, Professor of History, Professor of Applied Economics, Co-Editor, The Independent Review Deloitte & Touche USA LLC Southern Illinois University Johns Hopkins University Newsletter of the Independent Institute 3 NEW BOOK Randall G. Holcombe Liberty in Peril: Liberty in Democracy and Power in American History Peril DemocracY The United States of Amer- promote people’s and Power ica was, in Lincoln’s famous economic well-be- in American words, “conceived in liberty.” ing while also pro- History Within two centuries, how- tecting their rights. M ever, a different lodestar had At first, they aimed foreword by Barry R. Weingast become fixed in the cultural mainly at limiting INDEPENDENT INSTITUTE firmament: the political prin- the economic power of the new industrialists, ciple of “democracy” (major- but soon they sought to create and expand ity rule). This move from liberty to democracy was government programs like Social Security for a seismic shift in the political landscape. older Americans, and welfare programs that Liberty in Peril: Democracy and Power in targeted the economically disadvantaged, even American History, by Independent Institute Research as such programs crowded out more effective Fellow Randall G.