GOP Unveils Long Term Care Tax Deduction Package

On Friday, GOP House leaders outlined an alternative to President Clinton's proposed $3,000 tax credit for long term care. The GOP proposal will allow people to claim a tax deduction of up to $10,000 a year for long term care costs depending on their income, the AP/Chicago Tribune reports. Clinton's plan faces "powerful opposition" from many House Republicans, the AP/Tribune reports. Specifically, Ways and Means Committee Chair Bill Archer (R-Texas) is "staunch[ly]" opposed to new tax credits -- which have a constant value independent of a taxpayer's income. In addition, House Speaker Dennis Hastert (R-Ill.) is pushing for a new "above the line" tax deduction for individuals paying at least 50% of their own health insurance premiums, a measure that the nonpartisan Joint Committee on Taxation estimates could aid 26 million people (1.6 million of whom could not previously afford health insurance) when "fully effective" in 2007. The proposals are part of an end-of-session tax cut totalling up to $260 billion over 10 years that GOP leaders intend to finalize next week. The bulk of the deductions are aimed at helping small businesses, and Republicans say the changes are needed to "offset the higher labor costs" of a $1 increase in the minimum wage advocated by Democrats. Under current law, taxpayers can only deduct health expenses exceeding 7.5% of their adjusted gross income. According to a White House source, Clinton and Hastert "have discussed ways to compromise on long term care," since the issue is not a "politically divisive" one in the presidential campaign (Anderson, AP/Chicago Tribune, 10/21).