Paul L. Caron

Monday, June 17, 2024

Baez: The Medical Expense Deduction—Physicians, Medicine Men, And Spirituality

Beau Baez (Ohio Northern; Google Scholar), The Medical Expense Deduction: Physicians, Medicine Men, and Spirituality:

Expenses for buckskins, baskets, and Navajo healing ceremonies were allowed as medical deductions in Tso v. Commissioner of Revenue (“Tso”).  This case led to an expansion of the medical expense tax deduction to other non-traditional treatments, including energy healers that “connect spiritually through the universe.” While there are many alternative medical treatments of questionable efficacy, at least from an empirical perspective, courts after Tso appear more willing to allow the medical expense tax deduction for what might better be classified as spiritual experiences. In the four decades since Tso, every case and administrative ruling citing Tso has done so in a manner approving alternative healing. ...

As people seek new and exotic alternative medical treatments, a decision needs to be made whether to continue funding them through the medical expense income tax deduction.

This doesn’t mean people should stop trying to find something that works, only that until there is more evidence proving the efficacy of an alternative treatment the government should not subsidize it through the medical expense deduction. A treatment, after all, could be modern snake oil.

This article begins with discussing the medical expense deduction in Part 1, explaining the basic framework found in the Internal Revenue Code, federal tax regulations, and caselaw. Part II examines the historical connection between medical care and spirituality because some of the alternative medical care practices in this article can be classified as part medical and part spiritual. In Part III, there is a discussion on how mental health can lead to physical healing, such as when blindness is actually psychosomatic in nature. Given the religious—spiritual—nature of some practices, in Part IV there is an examination of the charitable tax deduction, which might appear to be the place for these practices. Connected, in some ways to mental health, Part V explores the placebo effect, which is well documented though not fully understood. In the final section, Part VI, there are several recommendations to restrict the current expansive reach of the medical expense tax deduction.

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