Increasing tax credits for child care could be a super easy public win for Congress as they barrel back into session for the last half of 2017. That win could come in the form a bipartisan bill to boost the Child and Dependent Care Tax Credit. It is a rare piece of legislation that can aid working parents, boost the economy, and help lawmakers facing a bipartisan disdain from their constituents.
The Child and Dependent Care Tax Credit was put in place in 1976. It offers parents or guardians a tax credit of up to 35 percent on qualifying child care costs not exceeding $3,000 for one child or $6,000 for two or more children. The maximum benefit is $2,100 for a household with two or more children. The problem is that since the credit was put in place, the cost of child care has continued to climb, particularly over the last two decades. According to the Bureau of Labor Statistics, the cost of childcare has risen at nearly double the pace of inflation since the 1990s. This is thanks to a confluence of increased child care demand and the inability to find and pay the wages of highly qualified care workers.
The proposed bipartisan bill would increase the tax credit up to 50 percent of qualifying costs for America’s lowest paid workers. There are very many reasons this makes sense. To start with it would likely boost workforce participation. That’s because many working parents are faced with an awful decision of whether someone should stay home and care for the children rather than paying for child care. That’s because often a jobs wages may barely cover care costs if they cover them at all.
Millennials increasingly find themselves in this position. According to a recent report from nonprofit Child Care Aware, the average child care costs are more than 27 percent of millennial median income when adjusted for inflation. The federal standard for affordable child care is seven percent of median income. The problem is that when parents are out of the workforce, they’re missing out on an estimated $79,000 in lifetime earnings.
Additionally, affordable child care saves employers. It’s estimated that U.S. companies lose $4.4 billion every year due to employees leaving because of child care breakdowns.
More than increasing workforce participation, increasing earning earnings and helping business bottom line, child care has also been shown to be beneficial to child development. It increases child socialization, increases the chance of nutritious meals for low-income kids and has been linked to the reduction of juvenile detention rates.
All of which adds up to huge benefits for the tax credit legislation’s cost of $37.2 billion over 10 years. And that translates to a smart, easy win for congress, for whom wins have been rare. Sadly, that almost guarantees they’ll fuck it up.