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This paper proposes to expand Medicare to cover comprehensive long-term care services, including home care and custodial nursing home care. These services would be financed by a surcharge on federal income taxes. Unlike the regressive payroll tax that finances Medicares hospitalization coverage, the proposed surcharge would not increase tax burdens for low-income people. Beneficiaries would share costs through deductibles and copayments, but the program would include stop loss coverage and special protections for low-income adults.

The child and dependent care tax credit (CDCTC) is a nonrefundable tax credit designed to help offset the expenses of providing care for children under the age of 13 or disabled dependents as long as a parent or caretaker is working or searching for work. In theory, a low-income family can qualify for a maximum $2,100 credit. The credit is not refundable, however, and families with low incomes generally owe little or no income tax. Thus, the theoretical maximum rarely applies in practice. This paper examines the revenue and distributional implications of making the CDCTC fully refundable.