Trump, as a candidate, proposed tax deduction for family caregivers

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As a candidate, Donald Trump promised several benefits for family caregivers. One was a tax deduction of up to $5,000 to help cover costs incurred in the care of seniors, such as home care, adult day care centers and similar expenses. Low-income families would also receive additional tax deductions from a higher Earned Income Tax Credit. Trump also proposed tax-sheltered dependent care savings accounts to cover long-term care of dependents.

There is little doubt that family caregivers would benefit from a deduction because caregiving drains and strains energy, emotions, physical stamina and bank accounts. A tax deduction could enable family caregivers to hire a home health aide for a few hours or days per week or to put an aging relative in adult day care. This would lessen the heavy burden they shoulder. By some estimates, family caregivers provide about $450 billion of care per year. That equals nearly 20% of the national health care dollars spent.

The nation would be under severe strain to attempt to function without them.

 

Critics say Trump’s tax deduction would not help average family caregivers

Some observers have critiqued Trump’s proposed plan as unworkable. Howard Gleckman, author of Caring for Our Parents and a contributor to Kiplinger’s Retirement Report and Business Week, noted in Forbes that the Trump proposal would be prohibitively costly and contained no budget for its administration. Gleckman noted that tax deductions by nature usually favor the well-off. He analyzed Trump’s proposal for three tax brackets and found that those in the higher tax brackets would benefit most. Similarly, he said, the tax-free dependent savings accounts for long term care would also favor top income earners most.

 

Why it matters

Whether the plan is workable or equitable, it will stimulate debate. Giving care to an elderly person is a big undertaking on multiple levels for most families. Significant numbers of adults become and are destined to become family caregivers at some point. Most family caregivers work outside the home, too. This means that in essence, they are working two jobs. Disproportionately female, and often in their later years also, these caregivers miss increased Social Security benefits if they abbreviate their working lives. They also suffer from decreased income as they cut hours or are unable to take on more responsibilities at work. They are sometimes passed over for promotions and raises because of their caregiving duties.

Using nearly twenty years of statistics from the Health and Retirement Study (HRS) and the National Bureau of Economic Research (NBER), Sean Fahle and Kathleen McGarry reviewed pertinent data and showed that once a woman begins caregiving, she runs an almost 10% risk of having to stop working. Her working hours also decrease by 4%. Over time, these losses add up. The researchers found that more than 30% of women in their 50s and 60s provide care and bear these economic consequences.

The problem appears on track to get worse. Fahle and McGarry projected that nearly 70% of people who reach the age of 65 will need help with the Activities of Daily Living (ADLs) at some point. Some will need care for lengthy periods. In most cases, this help will come from family members, usually wives and daughters. These family caregivers provide hundreds of billions of dollars’ worth of free care. A strong argument could be made that they deserve a break.

Under the Trump proposal, these persons would not be helped directly. Rather, the proposed tax deduction would apply to money paid to caregivers. If enacted, the proposed tax deduction would encourage the hiring of more senior caregivers. Perhaps it would help family members to save their own jobs and reduce their stress levels as they get some respite from a hired caregiver.

 

Sources

Fahle, S., and McGarry, K. (May 21-22, 2016). Women Working Longer: Labor Market Implications of Providing Family Care. Paper prepared for Women Working Longer Conference, Cambridge, Massachusetts.

Gleckman, Howard. (September 14, 2016). Donald Trump’s Plan to Support Family Caregivers. Forbes. Available online at http://www.forbes.com/sites/howardgleckman/2016/09/14/donald-trumps-plan-to-support-family-caregivers/#48dab2302acb. Accessed January 18, 2017.

Lauber, R. (January 13, 2017). Letters to the Editor. Tampa Bay Times. Available online at http://www.tampabay.com/opinion/letters/saturdays-letters-trumps-promise-to-family-caregivers/2309540. Accessed January 18, 2017.

O’Brien, Elizabeth. (October 10, 2016). Why Trump and Clinton Are Proposing Benefits for Family Caregivers. Time. Available online at http://time.com/money/4497456/trump-clinton-benefits-for-family-caregivers/. Accessed January 18, 2017.

 

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