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Letter Urges Congress to Strengthen Child & Dependent Care Tax Credit

Resource March 2, 2021

Last week, a group of the nation’s leading child care and child advocacy organizations, including the First Five Years Fund, penned a letter to Congressional leaders urging support for the temporary expansion of the Child and Dependent Care Tax Credit (CDCTC) included in the American Rescue Plan. The CDCTC is the only provision of the tax code designed to help families with the cost of work-related child care expenses, as well as adult dependent care expenses. The proposed expansion of the CDCTC is among a variety of critical child care investments included in the COVID-19 budget reconciliation bill.

In the letter, the groups highlighted the bipartisan support that the CDCTC has seen over the years. Though, despite that support, the value of tax credit has not been increased in 20 years, even as the cost of child care has risen significantly over the past two decades.

A different but equally important provision of the tax code, the Child Tax Credit (CTC), would also see a temporary increase under the American Rescue Plan. Unlike the CDCTC, however, working and nonworking parents may use the CTC for any expense, even those not related to the costs of raising children

According to the new letter, a recent study conducted by the U.S. Chamber of Commerce Foundation found that 50% of the parents who have not yet returned to work cite child care as the reason for not returning. Further, 75% of working parents currently have children staying at home with a parent during working hours. The impact has been even more acute for women, both because of their role in caregiving, and their representation in industries, such as the service and care industries, that have been hit the hardest. Overall, women have lost a net of 5.4 million jobs during the pandemic recession, nearly one million more job losses than men. In December, Black, Hispanic, and Asian women accounted for all of women’s job losses that month, and 154,000 Black women dropped out of the labor force entirely.

“In this time of uncertainty, we need to focus relief efforts on allowing parents to get back to work, and children to get back to school and child care,” the organizations wrote in the letter. “Unless the federal government helps to make child care more affordable for working families, this trend of parents leaving and staying out of the workforce will continue, further hindering our nation’s ability to recover from the COVID-19 pandemic and associated economic downturn.”

The full list of signers to the letter is included below.

DownloadCDCTC-Letter_Feb2021 (87.29 kB)

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