Will President Trump's Plans Save Parents Money on Childcare?

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Finding quality and affordable child care is a struggle for many working parents as child care costs have grown significantly over the last several decades. According to Child Care Aware of America, child care is “unaffordable” in 49 states, often exceeding the cost of college tuition, housing, transportation, or food. 

The lack of reliable, affordable child care causes many families to choose lower-quality informal sources of care over formal day-care centers or causes families to choose to live off of one income. Both decisions can have serious consequences for the health and well-being of American families. 

In 2017, the average cost of full-time daycare in the United States was $9,589 a year, which is 18 percent of median household income and two-thirds of income for an individual earning minimum wage. In-home care comes at a greater cost. The typical cost for a full-time in-home caregiver or nanny is $28,353 a year. 

With the price of child care costing as much as some colleges, parents are left with little choices. Studies have shown that high-quality child care is correlated with brain development and without this, children can suffer. Further, parents who make the decision to stop working because they cannot afford child care impact the workforce and their lifetime earning potential.

Changing Childcare

During Donald Trump's 2016 Presidential campaign, his plan to improve the cost of childcare seemed promising and beneficial for many American parents. His main points included:

  • Rewriting the tax code to allow working parents to deduct child care expenses from their income taxes for up to four children and elderly dependents.
  • Allowing parents to enroll in tax-free dependent care savings accounts for their children or elderly relatives.
  • Providing low-income households an Expanded Earned Income Tax Credit in the form a Childcare rebate and a matching $500 contribution for their savings accounts.
  • Creating incentives for employers to provide childcare at the workplace.
  • Providing 6 weeks of paid leave to new mothers before returning back to work.

It was also reported that President Donald Trump's daughter, Ivanka, met this fall with members of Congress to discuss child care legislation.

Proposed Childcare Tax

Under Trump's proposal, your child care tax credits depend on what state you live in. But is child care tax deductible in every state? Tax credits for child care are available in 26 states, including Washington D.C, according to the National Women's Law Center. Refundable child care credits are offered in 12 states. The states that do not offer a child care tax credit are Alabama, Illinois, and New Jersey.

In 2017, the federal income limit for those filing for a child tax credit is $55,000 for married couples filing separately; $75,000 for individuals, and $110,000 for married couples filing together. Trump's plan, increases the income limit to $250,000 for individuals and $500,000 for married couples.

Parents will have the opportunity to deduct child care costs from their tax bills, which is a step in the right direction. Trump also proposed a deduction of up to $5,000 for the care of children under the age of 13 years old. Families earning more than $250,000 per year do not benefit from this program. Families could also start a Dependent Care Savings Account, contributing up to the maximum yearly amount of $2,000. Trump proposes to help lower-income families by providing a 50 percent match up of up to $1,000 per year.

Proposed Paid Maternity Leave

Another critical issue for parents is paid family leave. The federal Family and Medical Leave Act allows individuals unpaid leave at the time of the birth of a child or an adoption, or in order to care for oneself or family when illness strikes, however, no federal paid-leave policy exists.

States are experimenting with their own plans for providing paid leave. California created a program in 2004 and New Jersey, Rhode Island, New York, and the District of Columbia have also created paid leave. Research on existing state programs found that parents are more likely to return to work after the birth of a child when they have access to paid leave at the time of birth. Studies also found that paid leave promotes the health and well-being of both mother and child.

In his child care proposal, Trump presented a plan that would enable six weeks of partially paid mandated maternity leave. he did not make any mention of paid family leave or paternal leave. Trump's proposal is more than what some women are currently receiving, but six weeks is a very short time when raising an infant.

What do parents do when they have to find childcare after those six weeks are over? Parents who are making enough money to benefit from tax breaks (married families earning $62,400 or $31,200 for single household families), can get a childcare rebate under the Earned Income Tax Credit.

Many of Trump's proposals do not adequately help lower-income families. The need is two-fold: families need to lower costs of childcare, but also need quality childcare options so parents can re-enter the workforce with confidence. This will increase America's work-productivity levels, which is important to Republicans.

One positive aspect that has come from the childcare discussion is that Americans are recognizing the importance of early childhood development. Almost three-quarters of respondents in a 2016 poll identified birth to age five as the most significant period for developing a child’s capacity to learn. A full 82 percent of Republicans, 86 percent of independents and 98 percent of Democrats said that “making early education and child care more affordable for working parents to give children a strong start” is important for our country's success.

Parental Concerns

Parts of Trump's proposed legislation seem positive and hopeful. He is the first Republican President to discuss paid leave, but by presenting leave for only women, some feel that he is reinforcing gender stereotypes. He also makes no mention of adoptive parents or same-sex couples in his paid leave proposal. 

Other concerns involve childcare for low-income families and how the tax deductions will help. The problem with deductions is that they would be a tax benefit for high-income families while providing no help to those lower-income families because they have no federal tax liability. Other Expansions of the Child Tax Credit or Earned Income Tax Credit would benefit all eligible families with children, even those with a stay-at-home parent and no child-care expenses.

This is an interesting and new view on stay-at-home moms and shows that Trump does view childcare as work. But if low-income families are forced to return to work to receive other government benefits, then staying home is most likely not a choice. So, does this really help low-income families at all?​

Making quality child care accessible to middle and low-income parents will allow them to remain in the workforce while providing their young children a positive, safe and thriving foundation—something all Americans deserve.

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