Looking for something to talk about at Thanksgiving that's relevant to everyone at the table? Here's an idea:
Between Social Security and Medicare, the Boomers are a fiscal time bomb waiting to go off. How will we pay for it? That's the USD 50 trillion question.
Boomers (and their parents) hold the vast majority of household wealth in the US. If you're Gen X or Millennial, I think you'd look at this chart and suggest those expenses should be paid for by the beneficiaries of the services. They have the money, it just needs to be redistributed within their generational cohort.
Since fewer and fewer members of the Boomer generation are working, income tax won't be an effective way to get at the money. It'll have to be a capital gains tax, property tax, or a general wealth tax. Getting rid of the basis step up at death would also be a good way to do it.
Boomers, on the other hand, would likely suggest we should just keep taxing income. With any sort of reasonable planning, they can shield themselves from an income tax burden and let their kids and grandkids pay for all of it. This would also exacerbate wealth inequality even further in the future.
By the way – this is only a good conversation idea if you hate your family. Happy Thanksgiving!
Fig. 1: Share of household wealth by age
Michael Crook, Head Americas Investment Strategy, UBS Financial Services Inc. (UBS FS)