During the presidential campaign, Donald Trump’s daughter Ivanka helped craft a childcare tax credit proposal for her father’s run, and now she’s pressing Republican lawmakers to make it reality. Unfortunately, the plan won’t do much good for most American parents.
On Sunday, Rep. Marsha Blackburn (R-TN) confirmed that she has been in talks with Ivanka Trump about turning her childcare proposal into legislation. “I am delighted to see that we’re looking at options for tax credits, tax incentives, ways for moms and dads to be able to write-off this child-care cost,” she said on CNN’s “State of the Union.”
President-elect Trump’s proposal, as outlined on the campaign trail, would allow couples who make $500,000 or less and single parents earning $250,000 or less to fully deduct the cost of childcare from their taxes. Unlike a tax credit that gives anyone who’s eligible extra money, tax deductions, which lower someone’s obligation, are most helpful to those who owe the most. The more a qualifying family spends on childcare, the more it can benefit.
Deductions do nothing for lower-income Americans who earn too little to owe federal income taxes and people with small tax bills. About 35 percent of Americans don’t have federal income tax liabilities.
Trump’s plan therefore offers a rebate for poorer families through the Earned Income Tax Credit. But it will still almost certainly come to less than what they should be able to get under existing law. Parents enrolled in subsidies through the Child Care and Development Block Grant get about $4,800 a year, but the share of families who get that assistance is at a 15-year low thanks to falling funding.
The tax code is also a clumsy way to distribute help to parents who are trying to afford a cost that can reach $17,000 a year but has to be paid monthly or even weekly. A tax deduction or rebate will only come once a year at tax time. Richer families will be in a better position than those living with tight budgets to front the cost of care and claim a deduction once a year. But low-income Americans are shouldering the biggest burdens: Families living in poverty spend a third of their incomes on childcare, while better off ones spend less than 10 percent.
Trump also proposed creating federally matched savings accounts that families could put money into and use to pay for childcare. That’s another solution that Blackburn seemed to suggest is on the table. “There ought to be a way to have a savings account that you can start saving from on day one to help with those costs,” she said on Saturday.
But all of these measures will do nothing to touch one aspect that Blackburn also raised: the quality of care. “One of the things that is most troubling as a mom in the workforce is finding child care and being certain that your children are safe and well cared for and not feeling like they are going to miss out on things because you put yourself on the guilt bus,” she said.
Tax credits to help parents afford the cost won’t address whether parents can find care and what kind of care they get. Even if they can afford daycare, many families might not be able to find a spot: In eight states, half the zip codes either have no centers or so few of them that there are three times as many children under age five as there are available spaces.
And parents who do manage to get a spot may still not be able to rest easy about the care their children will receive. In 2007, less than 10 percent of American childcare centers were deemed to be of high quality, while no state gets a passing grade for its health and safety standards.