State Tax Law and People with Disabilities: Opportunities for Supporting Fuller Participation in Community and Society

Mendelsohn, S. (2011, October). State Tax Law and People with Disabilities: Opportunities for Supporting Fuller Participation in Community and Society. New York: Burton Blatt Institute, Syracuse University.

Abstract

This paper examines the role of state income tax law provisions as a source of subsidization for the personal assistance services (PAS) that seniors and many people with disabilities need in order to achieve goals of independent living, and in order to remain in their homes and communities rather than being unnecessarily forced into nursing home care.

Our nation's attitudes toward disability have evolved over the past generation, but our law and programs dealing with long-term services and supports (LTSS) have not kept pace with contemporary aspirations. The problem is not lack of funds but misallocation of existing funds which by every used to support people in expensive nursing homes who could be equally or better cared for at far less per capita cost in their own communities.

Pending the rationalization of public policy in the healthcare and social services systems, the tax system offers strategies for helping to meet the costs of independent living and home-based LTSS. As one of a series of papers dealing with the ways tax provisions can do this, this paper summarizes relevant state income tax laws. WHILE the laws in question were not written with PAS in mind, they can make a difference in enhancing autonomy and choice, even for individuals and families of moderate means.

No fewer than eight federal tax provisions can help to defray costs of care, and most state-based provisions are modeled on these. The state provisions can be grouped into five categories: household and dependent care expenses (29 states plus DC); medical expenses (all states that have income taxes); workplace tax credits (13 states); accessibility (six states); and income support (2 states). They are briefly analyzed.

Major reforms are needed to target these and other tax provisions toward support of LTSS, and to improve the coordination between tax-based and program-based financing. Future papers will detail the cost-saving, quality of life-enhancing improvements that could be made.

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