Flex spending accounts for child care restored in tax bill
WASHINGTON — Flexible spending accounts that allow parents to use pre-tax money to pay for child care are back in the GOP tax plan, thanks to a change endorsed Monday by the powerful chairman of the House’s tax-writing Ways and Means Committee.
Shortly afterward, the key House panel voted 24-16 along party lines to adopt the amendment.
At the same time, after a day of partisan bickering over whether the Republicans’ sweeping tax plan would truly help the middle class, lawmakers also put new requirements on a tax credit used by working people of modest means.
The initial draft of the House GOP’s tax bill eliminated the popular accounts, which allow parents to save up to $5,000 worth of pre-tax dollars in flex spending accounts that employers offer.
A new version of the bill released late Monday reversed the repeal of the accounts and extended them for five years. It also preserved the existing child care tax credit.
The changes survived after they were included in a plan introduced by committee chairman Kevin Brady, R-Texas. The Republicandominated committee spent Monday afternoon reviewing the legislation, which details the first major overhaul of the U.S. tax code since 1986. The panel plans to continue discussing the bill, and voting on potential changes, throughout the week.
Rep. Lynn Jenkins, RKan., a Ways and Means member who had fought for the flex accounts, was pleased. “This is critical to working families,” she tweeted after it was restored in the bill. “Proud our communities were able to preserve this tax relief in our bill.”
The child care provisions are expected to provide important political help to a handful of vulnerable Ways and Means members. Rep. Kevin Yoder, R-Kan., who faces a tough re-election battle in his suburban Kansas City district, had been pushing to save and expand the accounts.
Joining him in lobbying House leadership over the weekend to save the accounts were Rep. Kristi Noem, R-S.D., who is seeking her state’s governorship, and Rep. Jason Smith, R-Mo.
“This is for families who can barely make ends meet,” Ms. Noem said Monday.
Mr. Yoder is among those proposing to increase the amount of money parents can stash in flex spending accounts by $2,500 in a separate bill co-sponsored with Democratic Rep. Stephanie Murphy of Florida — the Promoting Affordable Childcare for Everyone Act, or PACE Act. The latest version of the GOP’s tax plan doesn’t go that far, but it keeps the accounts from being eliminated.
Mr. Yoder and Ms. Murphy also have been pressing Republican leaders and the White House to boost a different tax credit to ease child care costs, the child and dependent care credit.
With this credit, taxpayers can claim expenses of between $3,000 and $6,000 to provide child care. It aims to make it easier for parents or guardians to work or look for work.
Mr. Yoder and Ms. Murphy’s bill would have made the credits refundable, meaning they would benefit low-income families whose incomes keep them from taking advantage of the credit under current law.
Mr. Yoder hadn’t gotten the increase he wanted, but the credit nevertheless survived in its current form in the latest version of the GOP tax bill.
The vote on the child care amendment capped a rancorous marathon session in which Republicans and Democrats argued heatedly over the nearly $6 trillion plan. Democrats repeatedly lodged objections to the bill, especially to its limits on prized deductions for homeowners as well as its repeal of the child adoption credit and the deduction for medical expenses.
It was the first of what are expected to be several days of work on the bill, as Republicans drive to push legislation through Congress and to President Donald Trump’s desk by Christmas. GOP leaders are aiming for House passage before Thanksgiving.
Republicans focused on findings by Congress’ nonpartisan Joint Committee on Taxation that the bill would lower taxes across all income levels over the next several years. Democrats returned repeatedly to a section of the analysis showing taxes would actually go up beginning in 2023 for some 38 million taxpayers or families making $20,000 to $40,000 a year.
Looking ahead to 2018 midterms, Democrats and Republicans are both trying to win the debate over who is truly looking out for middleclass Americans.