Clearly, these analyses were made up after the bill was amended from what we had given the senior legislature.
a. Was it changed first by the senior legislature? If so, was Ann Mack aware of this?
b. Both analyses refer to an “author”; senate says “author’s office”, assembly says “author’s statement.” Who is this “author?” Both analyses refer to “as amended May 5, 2010.
c. Was it changed after the senior legislature acted on it, and by whom? When did the senior legislature act – before May 5?
d. If changed after the senior legislature, why didn’t the analysis indicate that it was not what the senior legislature had acted on? Why wasn’t Ann Mack made aware that a significantly different bill was what the legislature was considering?
* The senate analysis:
a. paragraph #1 completely fails to make the point about the inequity between the first death step up vs senior couples.
b. paragraph #2 should say senior “couple”, not senior “citizen.”
c. The argument in support notes the insufficient exclusion being a disincentive to plan for care needs, but misses the idea that it is a disincentive to make other lifestyle changes, such as a smaller home in a location nearer to grandchildren, etc.
* The assembly analysis:
a. summary item 1b is clearly the work of the insurance and healthcare facilities lobbies. If seniors are allowed to save on capital gains, those savings must be used to give them business, or they don’t qualify for the savings at all.
b. Current law item #3 – is this accurate? I have understood that the surviviving spouse gets step up at first death on everything, but this says they keep the pre-death couple exclusion basis ($500,000) if they sell within two years.
As to whether it would be worthwhile to seek changing it, I would really need answers to my questions (a thru d) above. It would appear that all we will run into is another change after our efforts, so am inclined to give it up.
Making it easier for the elderly to take care of their long-term care needs is laudable. Reducing the residencecapital gains tax burden on the elderly and making it less necessary for couples to wait until one of them dies is a worthy objective. Handcuffing the two together as this proposal is a very bad idea.
The result will be that neither objective is achieved in any significant way. A relatively small number of people will be in a position to take advantage of this tax break. More important, only a tiny fraction of that number will become aware of this rather peculiar and specialized tax break at the time when they are willing to move.To make this law administratively practical, it will have to apply only to sales that are closely correlated in time to a move into long-term care, or to the purchase of long-term care insurance. But in the latter case, how can the tax benefit be adjusted if and when the insurance lapses and the premiums cease?
This makes it just another complication, benefiting a small group, to a tax code that is already several times as long as it should be and so complex that even tax professionals have serious problems with it. Although the small group which benefits may be worthy of help, it looks like special-interest legislation, especially with the apparent connection to the insurance industry.