By Elizabeth Hovde/ For The Herald
Should a low-income parent be forced to pay for someone else’s long-term care? What if the person getting the money has ample resources of his own? Should the low-income worker still have to take a pay cut to help out?
This is exactly what Washington state’s long-term-care law will require. The unpopular law imposes a regressive payroll tax of 58 cents for every $100 earned, with no income cap, on all workers. That means the working poor will be forced to give up a portion of their already-low incomes to others. The law is not compassionate, no matter how much money the state spends marketing it as such.
Several bills introduced this past legislative session would have repealed the misguided law, but the legislative majority and Gov. Jay Inslee continue to falsely believe they can fix enough of the law’s inequitable provisions to quiet taxpayers. They chose an 18-month delay, along with creating even more solvency concerns for taxpayers who are stuck with the inadequate program.
Backers of the long-term-care program make false promises about it providing security in old age. In reality, the supposed “long-term” benefit could only last a matter of months.
Repealing this law, instead of delaying it, could help people secure more promising plans for long-term care through savings and investment options made on their own. Those private savings and investments could be available for many other life needs, too. That’s important: Not everyone will need long-term care, but we all need savings for life’s needs and retirement.
The program is so unpopular, more than 475,000 workers applied to opt out of it under an option that used to be available. More exemption applications are expected, given new groups of people the state just allowed to leave.
While the delay, conveniently for politicians, moves the issue past the next election and keeps workers’ paychecks from going down this year, the unfair payroll tax will still hit paychecks soon enough. And the law will be just as unlikable in July 2023 as it is now. Inflation is not improving the picture.
Taxpayer-funded safety nets should and do exist to help people in real need, like Medicaid and other low-income health programs.
Instead of creating an irresponsibly wide safety net and treating it like an investment account for workers of all incomes, but not guaranteeing a return on investment, lawmakers should have limited their long-term-care activity to the following: closing loopholes that threaten the Medicaid safety net, cutting the tax on insurance premiums, and decreasing state rules and regulations that increase the price of insurance products. This could all be accompanied by increasing Washingtonians’ awareness of a need many of us will have and should start planning around.
The state-imposed, long-term-care program is not the solution, and the delay lawmakers quickly approved in January only puts off the pain this long-term-care law will bring.
There is simply no way to fix a law that taxes workers of all incomes, promising them a benefit they might never need or see. Worse, some workers will have to watch the dollars they need to make ends meet being given away to others with more resources.
Only full repeal can get us out of this long-term-care mess.
Elizabeth Hovde directs Washington Policy Center’s Worker Rights and Health Care Centers. Washington Policy Center is an independent, nonprofit think tank that promotes sound public policy based on free-market solutions.
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