I was invited to be a guest on the John Stossel Show, which aired on the Fox Business Network TV station. My segment was recorded on March 17, 2010. They flew me in and put me up in a hotel next to the TV studio, and the timing was great because it was also St. Patrick’s Day, so I got to see the huge parade down Fifth Avenue.
Here’s the segment I appeared on:
The overall topic of the hour-long show was on how to pay for the government benefits such as Social Security, Medicare, and Medicaid. Since my book (“How to Protect Your Family’s Assets from Devastating Nursing Home Costs: Medicaid Secrets”) explains how to save the most possible money by understanding the Medicaid rules, John wanted to explore some of the techniques mentioned in the book and on the website that advertises the book.
My segment was introduced by John saying something like, “Next, how some attorneys are advising people how to cheat the government!” Of course, I would never advise anyone how to cheat the government! Utilizing exemptions that are specifically set forth within the federal law is certainly not cheating. I mentioned on the show that if you go to a tax accountant, you fully expect that you will be advised how to take advantage of every deduction and loophole in the tax code, and that my advice is no different.
John said something like, “Yes, but with saving taxes, you’re keeping more of the money you earned, whereas with Medicaid planning you’re asking the government to pay your bills in the nursing home.” I don’t see a real difference in effect between these two: in both cases you are increasing the burden on taxpayers to pay for government programs. With tax savings, are you “selfish” for trying to keep more of the money you earned, at the expense of increasing everyone else’s taxes?
As the great Judge Learned Hand famously said in the case of Helvering v. Gregory (1934), “Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes. . . . Over and over again courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.”
The United States Supreme Court reinforced this sentiment in affirming the above ruling: “The legal right of a taxpayer to decrease the amount of what otherwise would be his taxes, or altogether avoid them, by means which the law permits, cannot be doubted.”
I see no difference in trying to save the money you earned by use of proper and legal planning techniques that are permitted by the federal government, so that part of the burden is shifted to the Medicaid program.
If lawyers had to decide whether such planning techniques best served the overall good of the nation, they would be part of the legislative process, not attorneys who are required by law to be “zealous advocates” for their clients. As I mentioned on the show, there are some attorneys who simply refuse to assist people with this type of planning. But if every attorney did so, then people who are legally entitled to these benefits would be shut out from the very benefits the legislation entitled them to. When a law is passed allowing people to claim a certain benefit, the legislators must certainly assume that some people will actually do so–and that it is not wrong to do so!
Medicaid, in California, Medi-Cal, is a program based upon income. In the case of LTC, the analysis is rather simple: does the cost of dealing with a catastrophic illness exceed a person’s income? If so, they are entitled to care to the extent their income falls short.
The next required step is to determine the characteristics of assets and their value. A person may act on those assets legally to become eligible for benefits…and they may protect the assets from recovery. That is the law.
The Stossel crowd yearn for an almost childish vision of the world that offers up simple explanations for very complex, almost organic issues. We earned the money, we shouldn’t have to pay taxes…it’s mine, I want it! No thought as to how the toy got there, it’s mine.
These people are utterly comfortable with a tax deduction of $1 million dollars for corporate officers to attend a retreat at a resort for business purposes. They would wave their placards all day if the most heavily subsidized industry in America, housing, lost favor in Washington. And like Extra Extra worshipers, they get a rush when people with incomes of $1 million or more get tax breaks.
The sun does not revolve around the earth. The world is more than 6,000 years old.
The ‘organic’ complex issue outside of the Stossel’s toy box is do we as a society acknowledge and therefore treat health care, long-term care like we treat education, highways, clean food and drugs, safe air transportation, access to televison transmissions? Do we allow everyone to play by the same rules?
When Stossel uses the word “cheat” he is pandering to his audience. That’s OK…the grownups will still have his toys ready for him when his tantrum is over.
I bet you know this already, but I wanted to say that Stossel always asks questions that are contrary to the beliefs of the people he is interviewing even when his personal beliefs may be in full agreement with you.
He tends to ask people “aren’t you greedy?” and other such questions. For example, John Stossel once interviewed Ron Paul. Stossel and Paul are so much in agreement that Ron Paul suggested that John may be his vice president if he won the party’s nomination, and yet when Stossel interviewed him, throughout the interview he asked the same kinds of questions that he asked you.
If he seems to agree too much with his guest, he wouldn’t have a chance at convincing those people who are not libertarians yet.
I also want to add that I am a libertarian and a huge fan of Stossel and I don’t see anything wrong with what you do.
Good comments on this post. Congrats on being on the show