Existing state income tax breaks for the elderly result in non-trivial reductions in state revenue and offer little relief to the most vulnerable elderly, according to new research released by the Carsey School of Public Policy at the University of New Hampshire.
The research also found that these tax breaks are unlikely to pay for themselves because they are not attracting significant numbers of retirees into the state or discouraging existing residents from leaving. In addition, proposed additional tax benefits would benefit high-income elderly households. Existing breaks primarily benefit middle and high income elderly households.
“If state policy makers really want to help the poorest elderly households they should consider extending the refundable earned income tax credit to those over age 65 or enacting some other kind of refundable low-income tax credit so that the household could actually receive a payment from the government,” said Karen Smith Conway, professor of economics and a fellow at the Carsey School.
Conway also noted that the lost tax revenue must be paid for in some way, presumably through cuts to spending — spending that could help the needy elderly or improve economic growth – or through increases in other taxes and fees.
The full report can be found here: https://carsey.unh.edu/publication/senior-tax-breaks.
Source: University of New Hampshire