Tax credit for long-term care

Caregiver relief: Clinton proposal would complicate tax code to aid families caring for elderly, disabled.

January 11, 1999

PRESIDENT Clinton's proposal to provide financial relief for families who give long-term care to the elderly and disabled is a good idea. But it's also another example of the increasing use of piecemeal tax benefits to court the middle class.

The plan calls for income tax credits (subtracted from the tax due) of up to $1,000 a year for those providing long-term care to the sick and disabled, primarily for persons who care for relatives in their home. More than 2 million Americans would be affected.

While the tax credit would help home caregivers, it is minimal reimbursement for the significant financial burden they shoulder, which is less expensive and may be better than that provided by institutions. Medicare doesn't cover this "personal care."

One unanswered question is how the government will cover the five-year, $5.5 billion cost of the program. President Clinton says simply closing corporate tax loopholes will pay the bill -- without new taxes or borrowing from other programs. Congress should be skeptical of such a magical funding formula, although Republicans have advocated a similar long-term care tax break for years.

Another flaw is that the tax credit wouldn't benefit the nation's neediest. People with incomes so low they don't pay federal income taxes would not be eligible for the credit.

If passed, the long-term tax credit proposal would join a growing list of symbolic tax breaks for the middle-class: the $500 annual "education IRA," the untaxed Roth IRA, the $400 income tax credit for each child. They add to the complexity of the tax code and contradict the goal of making individual tax returns easier to prepare.

The president deserves credit for recognizing the struggle of family caregivers who maintain disabled loved ones in the home. Yet, given the size and funding questions surrounding his tax credit proposal, the help is more illusory than real.

Pub Date: 1/11/99

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