True North

Reps. Laura Brod, (R-New Prague), and Paul Thissen, (DFL-Minneapolis) are working together to use tax incentives to encourage people into buying long-term care:

Last summer, Nebraska Treasurer Shane Osborn flew to the Twin Cities and pitched his state's unique savings plans at an event sponsored by the Minnesota Chamber of Commerce, Citizens League, 2020 Conference and Ecumen. The long-term care accounts work a lot like the well-known tax-advantaged 529 college savings plans that many people already have. State income tax deductions, up to $2,000 for couples filing jointly in Nebraska, provide an incentive to save for nursing home care, assisted living or home health services that family members may need down the road. Brod and Thissen plan to introduce legislation that would allow Minnesotans to open up this type of account.

Reps. Brod and Thissen should be congratulated for using tax incentives to encourage private citizens to set the right priorities.

Rep. Brod was one of the driving forces behind the health care reform that got signed into law last spring. Antime that she's involved with health care-related issues, it's a good day for Minnesota's Republicans. That's because she's a strong advocate of free market principles and a strong advocate for tax incentives, aka tax cuts.

Here's a brief overview of Nebraska's plan:

Participants may deduct up to $1,000 ($2,000 filing jointly) from their federal adjusted gross income for Nebraska state income tax purposes by depositing an equal amount into a designated LTCSP account. In order to qualify for Nebraska Income Tax deductions in 2007, an individual must make a deposit to a participating Financial Institution by the end of the calendar year.

Account deposits accrue interest tax-free until withdrawn at any age, as long as they are used for long-term care needs or transferred to a beneficiary after death. The money can be used to pay long-term care needs for spouses or others in which the account holder has an insurable interest. After the age of 50, the monies also can be withdrawn tax-free to pay for long-term care insurance.

This sounds like a solid plan because people saving for their needs forces them to set budgetary priorities. If there's anything that will help put the economy on the right track, it's us returning to a savings-first mindset.

Let's also understand that, just like anything involving health care-related issues, there isn't a single silver bullet that will solve everything. Nonetheless, it's a significant step in the right direction.

The devil is always in the legislation's language but conservatives should be optimistic that tax incentives are being used to encourage personal accountability and responsibility.

I'll have more on this reform legislation in the days ahead. Be sure to check back for more on this reform legislation.

Comments welcome at LFR.

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