Aging population to hit state tax revenues
WASHINGTON, March 9 (UPI) — An aging U.S. population could turn tax breaks for the elderly into a problem for state budgets, forcing legislatures to address expected shortfalls.
With the oldest baby boomers reaching 60 this year — and within sight of retirement — states are reconsidering tax breaks the elderly receive, Stateline.org reported Thursday.
It’s a double hit for states, Stateline said, since as more people become entitled to the tax cuts, they also become eligible for state-paid programs such as Medicaid. If projections that more than 20 percent of the U.S. population will be older than 65 in 20 years hold true, those hits will carry even more weight.
Since baby boomers are likely to be more affluent than previous generations of elderly citizens, some states are adjusting the tax cuts for older people to cover some of the shortfall, Stateline said.
Virginia in 2004 passed legislation that phases out seniors’ income-tax exemptions if they make more than $50,000, Stateline reported, while Georgia and Wisconsin have measures that go into effect in 2008 that exempts the first $35,000 of earnings.