Taxes raise money for government operations, but they also sometimes serve to change behavior in society. Taxes on cigarettes are a well-known example because they tend to cause smokers to quit, especially when the taxes approach the cost of a pack. Society further benefits from a reduction in health-related costs.
I propose a tax change that would provide retirees with more spendable (after-tax) income and change financial behavior.
The tax decrease also would reduce the federal deficit. But before we discuss the benefits to the Treasury, let’s describe how retirees get their boost in income. More