Feel the Burn?

Last week Bernie Sanders released his tax increase plan for paying for his $1.4 trillion annual single payer health care plan. Among other hefty increases, his plan would increase the estate tax on the “wealthiest .3% of Americans who inherit more than $3.5 million” to raise an additional $21 billion annually. The specifics are lacking, but the plan resembles President Obama’s annual budget proposals which call for the same reduction in the estate tax exemption to $3.5 million from the current $5.45 million, an increase in the estate tax rate from 40% to 45%, and no indexing of the exemption amount to inflation.

Two quick points:

1. As an estate planner who lived through 12 years of uncertainty with the estate tax exemption, it is disappointing to see politicians inject uncertainty back into the estate planning arena which makes planning difficult for clients and their families.

2. A plan that equals 40% of the current federal budget does not have enough rich people to gouge to pay for it so of course Sanders has to resort to taxing the dead more to try to pay for it.

She Doesn't Get It - Redux

A young writer recently wrote a web piece titled "If You Have Savings in Your 20's, You're Doing Something Wrong." The article contained the following gems:

• People who are saving in their 20s are people who don’t set their sights high. They’ve already dropped out of the game and settled for the minor leagues.
• Your 20s are not the time to save; they’re the time to gamble. $200 a month isn’t going to make the dent that a $60,000 pay raise will after spending all those nights out networking.
• We don’t have kids. We’ll be renting for the foreseeable future, and we have no problem eating McDonald’s when we’re skint.

Several quick points:

1.  If this advice was from a 40 year old looking back on life, it would be less laughable that it is coming from a 20 something trying to justify her lifestyle.

2.  I am not sure I know anyone who received a $60K annual raise but she seems to think they are plentiful.

3.  The value of the monthly $200 expenditure she mocks is $1 million after 45 years.

4.  If she continues to spend what she makes, she will rent forever, not just the foreseeable future.

5.  The writer and the 2 million plus people who liked her article on Facebook are likely constituents of Bernie Sanders because they are counting on others to provide for their retirement.