National View:
Expand child-care tax credit in tax reform.
As a parent, I know that the early years of a child’s life present a critical window for ensuring future achievement. But that window closes quickly, and children who enter kindergarten less prepared than their peers are more likely to experience academic difficulties and other challenges later in life.
Unfortunately, in Florida and 32 other states across the country, it’s more expensive to pay for quality child care and early education than for in-state college tuition. That puts these critical services out of reach for many low- and middle-income families. Access to high-quality child care helps children — especially those living in poverty — get a strong start in life and helps ensure equal opportunity for every child. Too many working American families today are faced with an unbearable choice: pay for access to these programs and endure financial hardship or forgo these critical investments for their children, knowingly putting them at a disadvantage. As a nation, we can do better.
As Congress continues to debate tax reform and looks to maximize economic growth, there is a growing political consensus that we need to do more to assist low- and middleincome families afford highquality child care for their kids. In recent weeks we have heard a strong push from many leaders inside Washington that family tax credits related to children should be enhanced. But not all credits for children are the same.
The Child Tax Credit was created to help ease the financial burden that families incur when they have children. Sen. Marco Rubio is championing its expansion. While this credit serves a vital purpose, and it is admirable that Rubio has assumed a leadership role on kids’ issues, the fact is that the tax benefits provided through the CTC are not tied to child care or early childhood education.
Parents may use the money they receive from the CTC for anything — perhaps they spend it on preschool or child care, but it can also be spent on a new television or a trip to the amusement park. Of course, parents should have the freedom to use their hard-earned income how they see fit, but it’s also critical that our country does more to help families invest in their children. If taxreform efforts are truly meant to help children and strengthen families, we need to invest in early childhood education.
The better solution lies with expansion of the Child and Dependent Care Tax Credit, which was created to help working parents offset their child-care expenses. Currently, the child care tax credit is not refundable, meaning most lowand some middle-income parents — the ones whose children miss out on key early childhood education programs — are not able to take advantage of it, despite their need for it.
According to the Tax Policy Center, nearly 40 percent of the credit’s value is claimed by families earning $100,000 or more, while almost no families in the bottom income bracket benefit. Moreover, the value of the child-care tax credit has not been increased since 2001, meaning the credit has not kept up with inflation and the rising cost of child care. The tax code is offering 20th-century solutions to a 21st-century problem.
Unfortunately, the CDCTC was merely maintained in the recently released House and Senate tax-reform plans. That’s not good enough.
That’s why my organization and other children’s advocacy groups are urging Rubio to expand his efforts on behalf of families and also advocate for the bipartisan Promoting Affordable Childcare for Everyone (PACE) Act as Senate taxreform negotiations move forward. This bill would enhance the value of the child-care tax credit for working families by making the credit fully refundable. It would also allow lowincome parents to benefit on the same scale as middle- and upper-income families. Additionally, indexing the credit to inflation will ensure the childcare tax credit keeps pace with rising costs of care, helping families for decades to come.
I applaud Rubio for his focus on helping families through tax reform and agree with him that the House bill does not do enough to help them pay for high-quality child care. Neither does the Senate’s bill. But a child-tax credit expansion is the least that can be done. While Congress looks to cut corporate tax rates and special interests in Washington lobby for their tax loopholes and breaks, a true investment in America’s future must include meaningful relief for working families and expanded opportunities for the nation’s children. I hope you will join me in urging Rubio to back the PACE Act and expand the child-care tax credit in tax reform.