Why is cash for caregiver's paid to a family member, then counted toward income and half of it has to be given to the state?

Half? I didn't know there was a 50% tax rate out there. Learn something new every day.Unless of course it is looked at as inheritance but then that is only taxed at 50% if it is over a few million. In that case maybe but not on just earned income. Look at the tax table. What do you earn?

Nowhere did I say it was a tax. What goes to the state is called a "contribution".