After preventing it from being eliminated, bipartisan Senators unsuccessful in efforts to strengthen the CDCTC
WASHINGTON, D.C. – Despite months of uncertainty about the fate of the Child and Dependent Care Tax Credit (CDCTC), bipartisan leaders in the Senate, including Senators Richard Burr (R-NC), Angus King (I-ME), Susan Collins (R-ME), Dean Heller (R-NV), and others, prevailed in protecting the credit from being repealed. Last-minute efforts to include an amendment that would have made the credit refundable were unsuccessful, however, leaving the credit unchanged and still out of reach for most low- and many middle-income families with a lower tax liability. In response to today’s news on the CDCTC, FFYF executive director Kris Perry issued the following statement:
“The cost of quality child care in America is one of the largest expenses families face each month,” said First Five Years Fund (FFYF) executive director Kris Perry. “Today, the Senate missed an opportunity to help working families by strengthening the Child and Dependent Care Tax Credit. Millions of American households rely on this credit each year, and a bipartisan group of lawmakers worked hard to extend it to more low-income families who would benefit most from receiving it. Our hope is that, during any conference negotiations, lawmakers will see that this credit rewards work and it allows parents to invest in an educational and developmental foundation for their children that will pay dividends for a lifetime.”
In recent months, a number of competing priorities put the fate of the CDCTC in jeopardy, including the threat of elimination in the name of flattening the code, concerns the credit would be rolled into other credits not specifically related to the cost of child care, and a lack of clarity from the White House about their priorities. The House preserved the credit in the final days of Committee negotiation, after it was reportedly eliminated in the framework released by Leadership. Then, earlier this week, Senator Susan Collins elevated the CDCTC to the top of her priorities list for Senate Leadership and introduced an amendment to strengthen the credit by making it refundable. This amendment, however, never received a vote by the Senate.
Earlier this year, a bipartisan group of lawmakers introduced legislation aimed at strengthening the CDCTC. 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 CDCTC and make it refundable to reach more low-income families with a lower tax liability.
The CDCTC was created in 1976 to help working parents with work-related child care expenses. Congress approved a temporary increase to the credit in 2001, and in 2012 a bipartisan majority voted to make that expansion permanent. Because the CDCTC is not a refundable credit, most low- and some middle-income, tax-paying families with qualified expenses are unable to take advantage of the credit. Therefore, higher-income families have benefited most from the tax credit.
The overwhelming research shows increasing access to high-quality early childhood education is one of the most effective investments for American families and communities, generating outcomes that are proven to set children up to succeed in school and become productive adults later in life. 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.
A 2017 national poll found 81 percent of the electorate—including 74 percent of Trump voters—support providing a child care-specific tax credit to help parents better afford quality child care and early education programs, with low- and middle-income parents who need more help getting a larger credit.
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