One of the common beliefs of lawmakers is that if you hand out a tax credit or tax incentive, it will be enough of an enticement to get taxpayers to jump through hoops of whatever kind.
The problem is that just handing candy out the back door is not very accountable nor responsible for that matter. First of all, there is absolutely no way that lawmakers or shamans, for that matter, can predict how much the tax credit will cost the public treasury. If it is a large enough incentive that will entice a lot of people because of its size, then perhaps 100% of the people who would qualify for the tax incentive will take the bait and claim the credit. On the other hand, if undertaking the activity for which the credit is being offered is too arduous or costly to do, then perhaps no one will take the bait and claim the credit.
And since credits tend to specify an activity, there is no assurance that the activity will be of a quality that the state would otherwise have required had the money been appropriated for the activity. For example, one of the proposals floated for the past few sessions would have handed out $1,000 to caregivers of elderly family members. With all that we hear and read about how family members have to give up their jobs and family time to care for elderly relatives, one can empathize with the thought of somehow compensating these caregivers, but is a tax credit the proper response?
The flip side of this concern is that in almost all cases of elder abuse, the perpetrator is a relative. So handing out a tax credit to someone who is providing care to an elderly relative does not assure that the elder is receiving quality care – just because the caregiver is a relative. Because there is no oversight or way of determining the quality of care, taxpayers may be subsidizing a caregiver who is abusive.
In addition, the proposal made the assumption that the person for whom the care is being given is elderly. That may not be the case where a child or sibling who is less than 60 years old needs 24 hour care. In this case, caregivers of family members who are less than 60 years old would not qualify for the credit even though the circumstances are basically identical.
By appropriating tax dollars for a specific program that would support caregivers of family members of any age would come with some accountability. The managers of the program could check the quality of care, provide specific support for those caregivers and even provide respite or time-out for caregivers. Lawmakers could then determine how much could be spent on the program and set some specific outcomes or goals for the program.
While the loss of careers and compensation is certainly one of the victims of having to provide care for an infirmed family member, it is by no means the only needs of a caregiver. As one caregiver noted, she wished someone had taught her how to lift her mother out of the bathtub without injuring her own back. As noted earlier, just handing out tax incentives is not necessarily the appropriate response to a problem public policy makers are trying to solve.
Another example where the idea of handing out tax incentives falls flat on its face is the proposal that would have handed out tax credits to install fire sprinklers in single and multi-family residential properties. A rash of fires in high rises that were built before the building code was changed in the City & County of Honolulu prompted this proposal. The measure would have handed out up to $7,000 for owner occupants of a single family residence and owner occupants of a multi-family structure would have been given the amount of the maintenance fee that is allocable to the cost of installing such a system.
Note well that the tax credit would only go to owner occupants. What about landlords renting to tenants? Perhaps lawmakers didn’t want renters saved by a fire sprinkler system, who knows? More importantly, what lawmakers missed is that many owners of such residential properties don’t want to install sprinkler systems because of the huge costs associated with the installation. So if owners can’t afford to install such systems, then how will the credit help because the credit can only be claimed after the installation is made?
Instead of handing out a credit for the installation of systems, perhaps lawmakers should look at making affordable loans available to these owners so at least they will have the money to undertake this installation. Makes more sense than handing out a credit for an expense owners can’t afford.