Amid efforts to eliminate the only provision in the tax code specifically created to help families with the cost of child care, a bipartisan group of lawmakers has introduced legislation aimed at strengthening it. Senators Richard Burr (R-NC) and Angus King (I-ME) and Representatives Kevin Yoder (R-KS) and Stephanie Murphy (D-FL) are the sponsors of the Promoting Affordable Childcare for Everyone (PACE) Act, which would expand the Child and Dependent Care Tax Credit (CDCTC), and make it refundable to reach more low-income families with a lower tax liability.
Nearly 15 million children under the age of six in the U.S. have working parents, and paying for child care presents a significant and growing burden to parents’ ability to enter, return, or remain in the workforce. And in most states, one year of quality child care costs more than one year of in-state college tuition.
According to a recent national poll, 81% of the electorate—including 74% of Trump voters—support providing a child care-specific tax credit to help parents better afford quality child care.
The PACE Act also increases the amount of pre-tax dollars families can put into Dependent Care Flexible Spend Accounts. The legislation makes both tax provisions more generous, and modifies them to reflect the changing economic landscape by requiring an annual inflation adjustments that will provide families with greater spending power when seeking care for their children. Because both tax provisions affect care for the elderly and individuals with disabilities, those enhanced benefits will extend to them as well.
Unfortunately, the tax proposal being promoted by Ivanka Trump and the White House, as well as Sen. Marco Rubio, eliminates the Child and Dependent Care Tax Credit, which currently up to $2,100 for parents with two more children. Instead, they are proposing an expansion of the Child Tax Credit that, reportedly, isn’t enough offset the loss parents will face with the elimination of the CDCTC.
FFYF supports expanding the CTC, just not at the expense of the CDCTC. The CTC is not tied to child care, and CTC money may be used for any expense—even those not related to the costs of raising a child.
If lawmakers want to help families who are struggling with the cost of child care, Congress should pass the PACE Act and strengthen the CDCTC.