The Republicans’ new 9-page tax reform framework relies mainly on general statements about reform goals, but it does include a specific proposal for a tax credit for caregivers.
The framework drafters would offer ”a non-refundable credit of a non-refundable credit of $500 for non-child dependents, to help defray the cost of caring for other dependents,” according to the framework text.
A copy of the framework text is available here.
A “refundable tax credit” is a tax provision set up in such a way that a taxpayer with a credit that exceeds taxable income can get cash back from the Internal Revenue Service.
The language in the framework document that the Republicans released today, which appears to be a summary of a longer document, seems to imply that the tax credit might be most useful for a ”member of the sandwich generation,” or a taxpayer who is caring both for a dependent adult and for a dependent child at the same time.
Some Republicans and Democrats have used hearings and bills focusing on the needs of caregivers to mend fences in recent years. In 2015, for example, Sen. Susan Collins, R-Maine, worked with Democrats to introduce S. 1719, a family caregiver support bill.
Framework drafters have emphasized that the framework document simply describes Republicans’ tax reform goals. The House Ways & Means Committee and the Senate Finance Committee still have to draft tax reform bills.
Other Life and Health Provisions
In addition to proposing a tax credit for caregivers, the document released today also proposes the following changes of special interest to life and health insurance agents:
It would eliminate the estate tax and the generation-skipping transfer tax.
It would eliminate the alternative minimum tax system.
It would cap the tax rate for the business income of small businesses and family-owned businesses at 25%.
It would preserve charitable deductions.
It would preserve retirement savings tax incentives.
The provisions referring to charitable deductions and retirement savings offer no details.
The document refers to deductions for charitable contributions along with deductions for home mortgage interest.
Dirk Kempthorne (Photo: ACLI)
“The framework eliminates most itemized deductions, but retains tax incentives for home mortgage interest and charitable contributions,” according to the document released today. “These tax benefits help accomplish important goals that strengthen civil society, as opposed to dependence on government: homeownership and charitable giving.”