Oregon has some unique and generous tax breaks that help Oregonians save on their state income taxes. This survey focuses on the Senior Medical deduction – a tax exemption that allows people 62 and older who itemize their deductions to claim all their medical expenses on their state income taxes.
When looking for ways to modify or change the deduction, many AARP members age 50 and older are in support of a proposal that bases the deduction on an individual’s income. Nearly two-thirds strongly or somewhat support a proposal that would phase the deduction out based on income. Along the same lines, 53 percent somewhat or strongly support a proposal that would make the deduction proportional to the tax filer’s income and medical expenses. More than one-third (37%) somewhat or strongly support increasing the eligibility age, while 41 percent oppose the age increase.
Two-thirds (65%) of Oregon members age 50 and older strongly or somewhat oppose eliminating the deduction. In fact, nearly four in ten (38%) claimed medical or dental expenses on their 2011 tax return under the deduction.
As the number of taxpayers age 62 and older claiming the Senior Medical Deduction increases, the cost of the deduction (the amount of tax revenue needed to pay for the deduction) to the state’s taxpayers also increases. In the 2011-13 biennium budget, the cost of the Senior Medical Deduction is expected to be about $151.5 million. By the 2019-21 biennium, the cost of the deduction is expected to be about $276 million.
“While most of our members do not support completely eliminating this benefit, the fact is that the increasing cost associated with the Senior Medical Deduction may not be sustainable in the future,” said Rick Bennett, AARP Oregon Director of Government Relations.
Other proposals presented in the survey questions call for changing the deduction to a subtraction which would remove the need to itemize deductions. Four in ten (41%) members support and 20 percent oppose this idea. When asked their support for placing caps on the deduction and tax subtraction, 26 percent say that they strongly or somewhat support placing a cap on the tax subtraction, 39 percent oppose the cap. Additionally, 27 percent support placing a cap on the deduction amount; however, 43 percent are opposed to a cap on the deduction.
When presented with specific tax expenditures (or tax breaks) to balancing the budget, the most supported proposal was the one to eliminate personal income tax credits for political contributions. Seven in ten (69%) Oregon members age 50 and older strongly or somewhat support the elimination of personal income tax credits for political contributions, while about one-half strongly or somewhat support eliminating the home mortgage interest deduction on second homes, or eliminating the personal exemption credit to only low and moderate income households. More than one in five supports the reduction of the personal exemption credit for all households by 10 percent, or eliminating the personal income tax credit for households that purchased long-term care insurance.
“With Oregon’s aging population, it is no surprise that Oregon AARP members don’t want to eliminate the Senior Medical deduction, but are open to changes,” concludes Bennett.
The survey of 2,000 Oregon AARP members was conducted November 28, 2012 to January 13, 2013. There is a standard error rate of +3.8%.