When I heard about this proposal, I was immediately opposed.  Since then I have learned this is a trend all over the country and already in place for many taxes in our area.  Furthermore, I have been shocked by the friends and family all for it despite their conservative desire for personal accountability.

I think this issue is a microcosm of endemic bad thinking in America right now.  And, to prove this is not generational war and selfish greed, I will have a compromise proposal.

So here are the arguments I have heard to give this preferential tax treatment to the elderly:

1.  Its not that much money (and we can afford it).  Even if you believe this, it has absolutely nothing to do with it.  If we don't need the taxes, let's drop them slightly for everyone.  The key issue is how we allocate burdens and should we give preferential treatment to a class of citizens?

2.  It allows older people to plan.  Since their ability to work is diminished, older people do have a reasonable case when it comes to fluctuating burdens.  The problem with this logic is the old slippery slope.  Isn't this true with almost all costs?  Utility prices change radically.  Food prices change.  Income tax rates change.  Should we exempt older people from all these headwinds?  Shouldn't planning for retirement include some contingency for cost of living changes?

3.  We can't just kick people out of their homes.  First off, this is rarely the issue and generally used for dramatic purposes.  Second, are we as a country prepared to make living in the home you want a right?  Not any home, but the one you want?  Is stopping the move from a house to an apartment a public policy issue that really needs to be prioritized?  I simply think this is a right that does not exist and as a society we simply can't afford.

4.  They don't use the services as much as younger people.  Well, this one is just not true.  The only key service it can be applied to is schools, but that is such false thinking.  Not only do they likely have grandkids in these schools, the purpose of education is not micro, it is macro.  The safety of their community and the development of the economy, depends on strong education.  Saying they don't benefit from it is simply insulting. 

Those are the most pronounced arguments I have heard for this initiative.  All pretty weak in my mind.  So, let me tell you the main reasons I am opposed.

1.  We are sending a signal not to plan.  We are just leaving an era of the most pronounced irresponsibility in our history.  And, here we are sending a message that if you plan poorly for retirement, we will make concessions to help out.  We have to send my generation an edict that saving is critical if you want to maintain your lifestyle in retirement.  This does the opposite.  

2.  Old people are no more deserving than others.    What about families with handicapped children?  Or families whose breadwinner just got laid off?  Or families who have been hit with expensive health issues that are forcing them to leave the neighborhood?  These are all everyday realities for people just as deserving of special treatment.  My wife (the nice one in the family) says help them all.  While that is nice, we simply can't afford to and it is not how our system works.

The truth is these measures keep passing because older people are organized and vote.  While I say vote NO on all these measures, I have a compromise should they pass.  Have them expire in 10 years.  The truth is the current generation of older folks are being hit with an economic crisis and have not planned for it (as a generalization, I admit), so let's help them.  But, let's not let bad policy become a right and expectation.

UPDATE:  The initiative failed.  No freeze for those over 65.  Vote was within 1%.  

Traditional media is in a crisis.  I recently posted 6 steps for print media to survive.  To summarize:  collaborate; stop printing; own the digital reader; give to all; reap cost benefits; make your content work for the technology.  It leaves one question open: what do you do about website content?

Here is the basic problem:  good content drives traffic;  good content costs money;   traditional online advertising around content is not effective enough to cover the costs.  Read this about the Seattle Post Intelligencer experiment:  traffic down 20% since they cut staff and just went online only.  Even a really well run newspaper just on the web and just based on ad revenue will not work.    

So, I have one more step in my plan.  Start charging for web content. But, you can't follow the Wall St. Journal model.  It is too expensive and will only attract your most die hard readers.  

Here's how you make it work:

If you are working with other media to standardize and distribute free media readers, work together to create a major media subscription. $50/year or $5/month and you get access to all the content you want.  Every paper, every magazine, every premium online media site.  Pool the money and distribute it based on traffic.  If you create better content, you get paid more.  Ad revenue would also be there to help.

Most comments on my posts about these industries is you will never get them to do something this radical.  Could be.  But, if traditional media does not admit they need to change everything, they will continue to fade away. 

Here is how I think about their value.  First off, Twitter, as I have argued, is a search business.  Regardless of how they monetize it in the future, the biggest value lies in the ability to siphon off search volume from the current leaders. So, the key questions to answer in coming to a value are:  how much share can they get and what is that share worth?  Let's start with the second question first.  Here are the current search market share stats:

So, what is a point of search share worth?  There really are only two semi-pure play search companies:

Google:  Market cap ($115bn) divided by share (81%) = 1.5bn per point of share

Yahoo:  Market cap ($18bn) divided by share (10%) - 1.8bn per point of share

Is this a fair way to get search share value?  Both these companies have other businesses that certainly contribute to value.  Of course, they also have businesses that detract (lots of high cost projects), but there is no question, search drives the vast majority of these market caps.  Yahoo has more diversified revenue source thus creating a premium.  Let's take the Google value and discount it since they get a dominant position premium.  So, let's cut it by 20%.  Therefore, for these purposes, a point of search share is worth $1.2bn.

Twitter is not even on the share map.  Why?  Well, they are not a search engine.  But, people are increasingly using Twitter to get information on products, reviews on events, news updates, etc.  And, this does not include anything creative they could do by aggregating links, retweets, influencer appeal, etc. to build real search results.

In the last week, I did about 1 twitter search for every 3 on google (this does not include my constant search streams I have in Tweetdeck).  Twitter has about 25% of my search volume.  Now, I am not your typical Internet user.  Let's say only 5% of people are like me.  That is 1.25% share.  

That creates a current value of $1.5bn (the discounted $1.2bn per share point x 1.25% share).  Now, you can poke all kinds of holes in this logic.  Even if you cut it in a third, you are looking at 1bn of real value TODAY.  Google and Yahoo are increasingly valued as mature companies - not on potential. Their growth is slowing massively, so their market caps are based on mostly current results.  Does Twitter have upside on their current position?  You better believe it.  

The potential of Twitter is enormous.  It is just hitting the mainstream.  The search model is not even developed.  The data created has option value above search.  And, the costs of running twitter have to be low.  No need to index the internet.  No need for millions of servers.

3x current value seems very reasonable to me given the current momentum.  So, $3bn to buy Twitter.  Not only is it worth this much, but the founders don't need to sell.  They have made money and they know the downsides being bought.  It will take an incredible offer to even create consideration.  $3bn could be low.  

If you think this is crazy, consider Ballmer was willing to pay $20bn plus for Yahoo - a business with many assets but decreasing traction and tons of complexity.  Is the hottest Internet property, with huge search game changing potential not worth 1/7th of that?  I think it is a no brainer.