WASHINGTON – Today, the House Committee on Ways and Means released the text of its tax reform legislation, which includes maintaining the Child and Dependent Care Tax Credit (CDCTC). Despite calls by some to eliminate this valuable credit, the House tax-writing Committee’s decision to preserve the CDCTC is a relief. For tax reform to truly help working families with young children, FFYF is hopeful that lawmakers will come to understand that the CDCTC should be strengthened to reflect the challenges families face paying for child care, and also made refundable to reach the families who would benefit from it most.
“We are relieved the CDCTC was not eliminated in Chairman Brady’s tax reform bill,” said FFYF executive director Kris Perry. “While tax reform requires making difficult decisions, we are encouraged to see that lawmakers recognize the importance of this crucial tax credit that millions of families rely on. As the legislative process moves forward, we hope lawmakers in the House and Senate will use tax reform as an opportunity to help America’s working families by expanding the CDCTC, and making it refundable. This will ensure the credit achieves its intended purpose of helping families afford the high cost of child care – particularly low- and middle-income families that need it the most.”
Created in 1976, the CDCTC is the only provision in the tax code that was specifically designed to help working families with the cost of work-related child care expenses. Nearly 15 million children in America below the age of six have working parents, and for these families, the cost of care is often a burden inhibiting parents’ abilities to enter, return, or remain in the workforce. In fact, the average cost of child care in America is higher than the average cost of in-state college tuition. Ensuring working families have access to high-quality child care is critical to providing children, and families, across the country with a foundation that is proven to set them up for long-term success.
In support of the CDCTC, a bipartisan group of lawmakers introduced legislation earlier this year 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. Nobel Prize-winning economist James Heckman recently wrote that, “Anything short of [strengthening the CDCTC] will be a missed opportunity to spur economic growth for generations to come.”
The U.S. has consistently used the tax code to address real-world problems many Americans face, and to incentivize behaviors that result in overall economic benefits. And today, as a nation, families are struggling with high costs and shortages of quality child care providers. In the same vein that we use tax credits to make higher education or homeownership more accessible, the tax code should also make care for children from birth through age five a priority.
As Congress moves closer to a final tax bill, FFYF is hopeful that lawmakers will not only maintain the CDCTC, but strengthen it to reflect the challenges families face accessing quality child care.
The First Five Years Fund provides knowledge, data and advocacy – persuading federal policymakers to make investments in the first five years of a child’s life that create greater returns for all. FFYF helps America achieve better results in education, health and economic productivity through investments in quality early childhood education programs for disadvantaged children. http://www.ffyf.org