COMMON SENSE SOLUTIONS

Kitchen Table Tax Relief

When Minnesota families sit around the kitchen table figuring out their monthly budgets, they find themselves making some tough choices. Will we skip our summer vacation? Hope the car lasts through another winter? Pick up another part-time job? But some line items aren't negotiable. Chief among those: the cost of caring for children and, for many families, elderly parents. Al Franken's Kitchen Table Tax Relief will ease the burden on hundreds of thousands of Minnesota families and help them get ahead.

Over 280,000 Minnesota children under the age of 6 are in need of child care. And while the cost of child care has risen dramatically, the Bush-Coleman economic plan has essentially frozen the level of child care funding for the last eight years. According to the Administration's own estimates, 300,000 children will lose child care assistance by 2010, and 150,000 have already lost child care assistance since 2000.

Meanwhile, more and more Minnesotans are also providing long-term care for elderly family members. The 65 and over population is currently the fastest growing age group in the state. Between 2000 and 2030, the 65 and over population will roughly double from 12 percent to 24 percent of the total state population. In addition, the group most likely to need long-term care – Minnesotans 85 and older – will nearly triple statewide from 90,000 in 2000 to 250,000 in 2050. The aging of the state's population has created a "sandwich generation" of Minnesotans who are caring for both their parents and their children. More than ninety percent of all long-term care in Minnesota is provided informally, usually by spouses or adult children. The average out-of-pocket costs facing family caregivers amount to roughly $5,500 per year – more than most families spend on health care.

Al's plan:

• Increase funding through the Child Care and Development Block Grant to help working families make ends meet.
• Expand the Child and Dependent Care Tax Credit to cover 35% of child care expenses for families earning up to $100,000 – and make the credit fully-refundable up to $500. More than half of Minnesota families with children would be eligible to take advantage of this more generous credit, and a great many more would be eligible to take advantage of existing incentives.
• Create a $2,000 Caregiver Credit for any individual with substantial long-term care needs or to his or her caregivers – that covers more than a third of the average costs to caregivers. The credit will not require families to engage in any complicated accounting of their out-of-pocket costs. It will be phased out for families earning more than $150,000. This new credit would help more than 100,000 Minnesota residents and families.
• Create a Family Flexibility Credit for the many Minnesota businesses who want to help their employees make ends meet. This credit would reward companies that provide family-friendly benefits, such as child care assistance or the opportunity to telecommute. Al would provide up to $1,200 per employee to cover expenses associated with making these benefits available. The credit could also be applied to company policies that help families address the long-term care needs of aging loved ones.

What would it cost?
The total cost of Al Franken's Kitchen Table Tax Relief Plan is approximately $6.5 billion per year. Franken would pay for the cost of his plan without increasing the deficit by dedicating money from implementing the GAO's recommendations for reducing improper federal payments; by enacting anti-tax-shelter reforms; and by closing the tax loophole that allows investment managers to use offshore tax havens to defer paying taxes on the money they earn.