Investing in long-term prosperity
Though we don’t agree on the overall tax package being debated in Washington, we do agree that Congress should act to increase the value of and access to the child tax credit and the child and dependent care tax credit for families with children ages 0-5 as key steps in helping low- and middle-income working families and investing in our country’s long-term prosperity. In a sense, families with young children are doing extra work for all of us, raising the workers, innovators, and entrepreneurs who will sustain a strong society and economy well into the future. For this reason, all Americans have a stake in helping parents do the best job possible nurturing their children’s healthy early development.
But today 40 percent of American children under the age of five are growing up in households with an annual income below $50,000. And more than two-thirds of these children are growing up in households where all resident parents are in the workforce. For these families, child care is not a luxury, it’s a necessity — and often an expensive one.
The child tax credit and the dependent care tax credit are effective and efficient mechanisms for easing the financial burden so families with young children are in a better position to provide the quality care and early learning opportunities their children need to grow into productive, responsible adults.
Specifically, we recommend expanding the value of, and increasing access to, both credits. These changes will reach lowand middle-income families with children far more effectively than a simple increase in the standard deduction, which would provide little or no benefit to, for example, a single minimum-wage worker with two young children.
Why is it so important to focus on young children? Recent advances in brain science, tell us that the very earliest years are a time of foundational growth and development. From birth on (and indeed even before birth), babies and toddlers are influenced by their environment and profoundly shaped by their interactions with others.
If young children are not engaged and nurtured in those years, or worse, if they are exposed to stress, trauma, or neglect, the consequences can last a lifetime. Abundant research shows that the most vulnerable children have already fallen well behind their better-off peers by the time they enter school — these gaps not only persist, they tend to widen in later years.
Unfortunately, the years that are most important from a developmental standpoint are also the years when staying at home or paying for child care is most unaffordable for many low- and middleincome parents.
We believe that current child tax credit proposals under discussion do not go far enough to support these families, and we urge a refundable Young Child Tax Credit that adds $1,500 to the existing $1,000 child tax credit (to provide a total credit of $2,500) for children through the age of 5 to
If one of the tests of sound reform is putting our nation on a stronger footing to meet the challenges of the future, a modest shift in favor of families with young children is not only worth the cost, it’s smart.