Across the country, families are struggling with the high cost of child care, and the tax breaks that are supposed to offer some relief have remained insufficient and unaltered for too long.
President Donald Trump has asked House Republicans to include updates to these credits in an upcoming tax reform package. But if those changes are anything like the ones he promoted on the campaign trail, they’ll help out well-off Americans while providing little aid to the people who need it most.
A better course is being offered by Sens. Angus King, I-Maine, and Richard Burr, R-North Carolina. They have reintroduced the Promoting Affordable Childcare for Everyone, or PACE, Act, and it would help support high-quality child care for many low- and middle-income parents.
The growing expense of child care is a burden for many families — in Maine, the annual cost of child care for an infant is slightly more than a year of in-state college tuition, and nearly 17 percent of the median family income. (The U.S. Department of Health and Human Services says anything more than 10 percent is unaffordable.)
For lower-income families, however, the burden is especially heavy, often more than 30 percent of their incomes. This is also the same group that in many cases is paying as much as 40 or 50 percent of their income for housing.
The high cost puts these families in a jam, either leaving little money leftover for transportation and food — much less education, training or savings — or forcing them into sub-optimal child-care situations. That can include taking a parent or relative out of the workforce to provide care or sending a child to a cheaper, low-quality and possibly unlicensed provider.
If we want encourage work and give our youngest children a head start, neither is satisfactory.
As a remedy, Trump has proposed raising the limit on child-care tax credits, a good start.
But he also wants to keep them deductible, rather than fully refundable, meaning only those parents with an end-of-the-year tax liability would benefit. That cuts out most low-income Americans and many in the middle class.
The PACE Act, however, would both expand the tax credit and make it refundable, ensuring that it targets the Americans most harmed by the high cost of child care. It would also index the credit to inflation, so it wouldn’t lose its intended effect over time.
The act would also increase the amount of pre-tax dollars families can place in Depedent Care Flexible Spending Accounts and index that to inflation, to largely the same effect as the tax-credit change.
(Both programs are also available to families caring for a disabled or elderly relative.)
If we want to give parents the breathing room they need to provide for their families, if we want them to have the time and money to train for a better job, and if we want them use a day-care provider that will properly nurture their child, then that is the way to go.
Otherwise, families will continue to be stifled under the heavy weight of child care, and children will ultimately suffer.
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