Connect with us

Personal Finance

Trump wants to provide caregivers with a tax credit. What experts say

Published

on

JGI/Tom Grill | Tetra images | Getty Images

At a recent campaign rally, President-elect Donald Trump promised new financial help for family caregivers.

“I will support a tax credit for family caregivers who take care of a parent or a loved one,” Trump said during an October speech at New York’s Madison Square Garden.

“It’s about time that they were recognized, right?” he said. “They add so much to our country and are never spoken of ever, ever, ever, but they’re going to be spoken of now.”

Trump has not elaborated on the details of that tax credit and his team did not respond to requests for comment. He has also promised other tax breaks aimed at helping Americans, including eliminating taxes on Social Security benefits, tips and overtime and a deduction for auto loan interest payments.

“It definitely adds up to big net tax cut,” Garrett Watson, senior policy analyst at the Tax Foundation, said of the president-elect’s tax proposals.

Family caregiving having a ‘political moment’

Women bear the burden of caregiving in the U.S., and that impacts the workforce

No one policy will be a ‘silver bullet,’ expert says

To enact a caregiver tax credit, Trump will need Congress’ support.

A bipartisan bill — the Credit for Caring Act — proposes a credit of up to $5,000 per tax year to help caregivers cover long-term care costs. Under the terms of the proposal, the credit would cover 30% of expenses exceeding $2,000. To be eligible, caregivers would need to have more than $7,500 in income and be paying for long-term care for a spouse or other dependent.

“We will urge new leadership in Congress and the White House to take it up and pass it,” LeaMond said.

Some states have already taken up the issue, she said. Oklahoma and Nebraska recently passed their own caregiver tax credits, while Maryland has created a caregiver expense grant program.

An October AARP survey found roughly 90% of Americans ages 50 and over support a federal tax credit for eligible family caregivers. Earlier this year, a national poll from Bipartisan Policy Center Action found 82% of registered voters support caregiver tax credits.

More from Personal Finance:
What Trump’s presidency could mean for the housing market
Trump’s win may put popular student loan forgiveness program at risk
What the Fed’s latest interest rate cut means for your money

The federal caregiving tax credit proposal provides a “key opportunity” to include family caregivers in upcoming federal tax policy discussions, said Jason Resendez, president and CEO at the National Alliance for Caregiving.

However, no one policy is going to be a “silver bullet” to alleviate the burden of caregiving, he said.

“We can’t lose sight of the bigger and larger-scale investments that we need,” Resendez said, including stronger home and community-based supports, paid family and medical leave and additional long-term services and supports.

To be sure, as lawmakers consider tax policy proposals, they may adjust the parameters to limit how much Trump’s proposed tax breaks may cost, Watson said.

“Step one is to figure out amongst Congress what their tolerance is for any debt increase,” Watson said.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Personal Finance

Even U.S. presidents make mistakes with their money, author says

Published

on

Thomas Jefferson, 1848/1879. Artist George Peter Alexander Healy.

Heritage Images | Hulton Fine Art Collection | Getty Images

Before becoming president, ‘they are just like us’

Annie Nova: How much do presidents actually manage their own money? I imagine they outsource much of that strategizing and effort.

Megan Gorman: Well, up until most of them become president, they are just like us. They are managing their budgets and trying to grow assets. But what was striking in looking at their finances across different eras is that a lot of the same issues that we struggle with today, are ones that Americans have always struggled with.

The difference is that in many ways it is much harder today to achieve the American Dream. 

After all, Richard Nixon was able to go to college in 1930 for $230 a year. That’s around $8,000 in today’s dollars. And, in 1886, Grover Cleveland could buy a home on 26 and ¼ acres about three miles north of the White House for $21,500, the equivalent of $700,000 today.

‘Money caused and causes anxiety for everyone’

AN: Who was the most frugal president?

MG: Calvin Coolidge was incredibly frugal. He would have told you he was “thrifty.” Part of this comes from advice he received from his father growing up: that it was important to save and allow money to compound. Even when he was in the White House, the head housekeeper complained that he was always poking his head in to check on the cost of food being purchased.

The one that surprises most people was that John F. Kennedy was pretty frugal as well. Just because he came from money didn’t mean he wasn’t keeping an eye on the bottom line. Throughout his life, friends noted that he was “tight with a buck” and monitored costs.

AN: Was there a president who overspent?

MG: The biggest spender of them all was Thomas Jefferson. Jefferson had very nice taste, and that taste was enhanced from his time in France. If there was ever a dinner party you wanted to attend, it was Jefferson’s. Even up to the time he passed away, he was still trying to buy wine on credit.

Interestingly enough, given the debt he had when he was dying — more than $2 million in today’s numbers, he was clever in that he made sure in his estate plan that assets passed to his daughter and son-in-law could not be attached by creditors.

Megan Gorman, author of All The Presidents’ Money.

Photo: Marc Cartwright

AN: For whom did money cause the most anxiety?

MG: Money caused and causes anxiety for everyone. That being said, some handled it better than others. 

For instance, Ronald Reagan used budgeting as a mechanism to manage emotion when it came to money. This is no surprise given that he grew up in a financially unstable household with an alcoholic father. The Reagans would at times have to leave town in the middle of the night to get away from their landlord as they didn’t have the money to pay rent. As Reagan got older, he found that having a budget and sticking to it allowed him to manage his financial anxiety.

Early experiences informed money habits

AN: Who had the most financial struggles before becoming president?

MG: Harry Truman is one that easily comes to mind. Truman spent the first four decades of his life going through a lot of financial volatility. From his father losing all their money so he couldn’t go to college, to Truman having a series of unsuccessful business ventures including a zinc mine, an oil well and the famous haberdashery, he really struggled. 

But it wasn’t until he was in the presidency that he was able to save his salary along with a special stipend he received for two years that was tax-free. At the time of his death, he was worth $750,000, or $8 million today.

AN: How did a president’s childhood experiences impact their financial behavior?

MG: The best example would have to be Herbert Hoover.

Hoover’s story could have gone completely wrong for him. He lost both of his parents by the age of 9. He and his siblings are split up among different family members but they share the same financial guardian. So from an early age, Hoover is required to budget and submit his expenses to this guardian.

As he becomes a teenager, he takes on bookkeeping for his uncle’s business and really learns to be a “financial apprentice.” The budgeting and bookkeeping have such an impact on his financial skills that he becomes the treasurer of his class at Stanford. 

He just keeps building on his skill set again and again. That skill set would grow him great wealth — and allow him to do a lot of charitable work over his lifetime.

Money opps in post-presidential life

Continue Reading

Personal Finance

Here’s the deflation breakdown for October 2024 — in one chart

Published

on

As inflation has throttled back from pandemic-era highs, consumers have seen prices decline outright for many household items.

This dynamic, known as deflation, generally doesn’t occur on a broad, sustained scale in the U.S. economy: With limited exceptions, businesses are generally loath to lower prices once they’ve increased, economists said.

But some pockets of the economy — largely, prices for physical goods from new cars to appliances, sporting goods, consumer electronics and certain apparel — have deflated over the past year, according to the consumer price index.

“We are seeing [deflation] to some extent,” said Stephen Brown, deputy chief North America economist at Capital Economics.

Largely, prices have pulled back as pandemic-era contortions in supply and demand dynamics unwind, economists said. The U.S. dollar has also been relatively strong against major global currencies, making it cheaper to import goods from overseas.

But supply chains have “normalized” and deflation has “moderated to a pretty significant degree” as a result, said Mark Zandi, chief economist at Moody’s.

Where there has been deflation

Prices for some categories — like furniture and bedding, men’s clothing, cosmetics and used cars and trucks — are down from October 2023, but they’ve rebounded somewhat in recent months, according to CPI data.

That said, used cars and trucks should see a resumption of deflation since “wholesale prices have fallen recently, and supply and demand continues to improve in the sector,” Bank of America economists wrote on Monday in a research note.

Energy prices and electronics

Gasoline prices are also “way down,” Zandi said.

They’ve declined more than 12% in the past year, according to CPI data. Drivers paid $3.05 a gallon, on average, at the pump as of Nov. 11, according to the U.S. Energy Information Administration.

Consumers “could get more relief there because global oil prices are soft,” Zandi said.

That softness may be in anticipation of President-elect Donald Trump’s proposed policies around China, said Zandi. Those may include tariffs of at least 60% on goods imported from China, a nation with a huge appetite for oil. If Trump’s policies were to negatively affect the Chinese economy, they’d also likely dampen China’s oil demand.

Annual inflation rate hit 2.6% in October, meeting expectations

Other energy commodities refined from oil have also seen huge price declines. Fuel oil prices, for example, are down over 20% in the past year, a trend that should contribute to lower prices elsewhere such as for airfare, economists said.

Food prices are also generally underpinned by their own unique supply-and-demand dynamics, economists said. Turkey, snacks and bacon are about 4% cheaper than they were a year ago, for example.

Lower energy prices can also take pressure off food prices, as it costs less to transport and distribute food to grocery store shelves.

Consumer electronics have also seen big price declines: Computers, video equipment and smartphones are respectively 5%, 10% and 9% cheaper than they were a year ago, according to CPI data.

But consumers might not experience those lower prices at the store: They may only exist on paper.

That’s due to how the Bureau of Labor Statistics measures inflation for certain consumer goods like electronics, economists said.

Technology continually improves, meaning consumers get more for their money. The BLS treats those quality improvements as a price decline, giving the illusion of falling prices on paper.

Continue Reading

Personal Finance

House just voted yes to increase Social Security for some beneficiaries

Published

on

A bipartisan bill to change Social Security benefit rules for pensioners passed in the House of Representatives on Tuesday, with 327 lawmakers voting to support the measure.

Now, the proposal heads to the Senate, where the chamber’s version of the bill has 62 co-sponsors, “surpassing the majority needed to pass the bill on the U.S. Senate floor and send it to the president’s desk to be signed into law,” Reps. Abigail Spanberger, D-Virginia, and Garret Graves, R-Louisiana, co-leaders of the bill, said in a joint statement.

The proposal — called the Social Security Fairness Act — would repeal rules that reduce Social Security benefits for individuals who receive pension benefits from state or local governments.

It would eliminate the windfall elimination provision, or WEP, that reduces Social Security benefits for individuals who worked in jobs where they did not pay Social Security payroll taxes and now receive pension or disability benefits from those employers. About 3% of all Social Security beneficiaries — about 2.1 million people — were affected by the WEP as of December 2023, according to the Congressional Research Service.

More from Personal Finance:
What Trump’s presidency could mean for the housing market
Trump’s win may put popular student loan forgiveness program at risk
What the Fed’s latest interest rate cut means for your money

The bill would also eliminate the government pension offset, or GPO, which reduces Social Security benefits for spouses, widows and widowers who also receive pension checks. As of last December, about 1% of all Social Security beneficiaries — or 745,679 individuals — were affected by the GPO, according to the Congressional Research Service.

These rules, which have been in effect for decades, reduce the incomes of certain retired police officers, teachers, firefighters and other public servants, Graves said during a Tuesday speech on the House floor.

“This has been 40 years of treating people differently, discriminating against a certain set of workers,” Graves said.

“They’re not people that are overpaid; they’re not people that are underworked,” he said.

Supporters call bill a ‘step in the right direction’

Social Security is a key issue for voters, survey finds: Here’s how to maximize benefits

On Tuesday, Larson voted against the Social Security Fairness Act, as well as another bill, the Equal Treatment of Public Servants Act. The latter bill would use a new formula for Social Security retirement and disability benefits for pensioners rather than eliminate the WEP. It would not change the GPO.

The bill, which was proposed by Rep. Jodey Arrington, R-Texas, failed when it was brought up for a vote.

“I could not vote for the bills on the floor tonight because they are not paid for and therefore put Americans’ hard-earned benefits at risk,” Larson said in a statement. “It would hurt most deeply the five million of our fellow Americans who receive below poverty checks, and almost half of all Social Security recipients who rely on their earned benefits for the majority of their income.”

Critics say the bill will weaken Social Security

The Social Security Fairness Act would add an estimated $196 billion to deficits over the next decade, the Congressional Budget Office has estimated. It would also move Social Security’s trust fund depletion dates closer by an estimated six months, according to the Committee for a Responsible Federal Budget.

“The long-term solvency of Social Security is an issue that Congress must address,” Spanberger said on the House floor on Tuesday.

“But that is a separate issue from allowing Americans who did their part, who contributed their earnings, for them to retire with dignity,” she said.

However, critics say Social Security’s funding woes should be a priority for Congress now. The program’s actuaries project the trust fund used to pay retirement benefits may be depleted in 2033, at which point 79% of benefits will be payable.

“This is not the right policy,” said Romina Boccia, director of budget and entitlement policy at the Cato Institute. “It’s what special interests were pushing, and politicians are responsive to their demands.”

Though the alternative bill proposed by Arrington would not address the GPO, it would provide a “fairer formula” for the WEP, Boccia said. However, broader changes are needed to shore up the program’s finances.

“We should reform Social Security so that it provides basic income security to the most vulnerable Americans in old age without adding to the debt or tax burden that younger workers face,” Boccia said.

Continue Reading

Trending