High-quality child care helps provide all kids — especially those living in poverty — with a shot at future success. It helps prepare them for kindergarten and helps ensure they will graduate from high school. Despite its benefits, child care costs have increased substantially in recent years. Alarmingly, in many places, including in Maine, it is now more expensive to pay for high-quality child care than it is to pay for in-state college tuition. The resulting financial pressures are felt most by low-wage workers, who spend, on average, more than 30 percent of their income on child care.
According to the Economic Policy Institute, the average annual cost of care for one infant in Maine is $9,512, nearly 17 percent of a typical family’s income. The U.S. Department of Health and Human Services classifies child care as affordable if it costs no more than 10 percent of a family’s income. By this standard, only 26.7 percent of Maine families can afford infant care. That leaves a staggering number of Maine children at an unacceptable disadvantage.
And with more children comes an even heavier financial burden for families. Child care for two children — an infant and a 4-year-old — costs $16,382 a year. While this is slightly less than the national average, it is still nearly 64 percent more than average rent in Maine and nearly a third of a typical family’s income. Working parents in Maine are increasingly faced with difficult decisions when it comes to balancing care and work, with some concluding that the steep cost of care serves as a barrier to working more — or working at all. For many families, having two or more sources of income is often essential to make ends meet.
Since child care is becoming increasingly more difficult for families to afford and serves as a barrier to employment, lawmakers would be wise to ensure our tax policies keep pace with rising child care costs and working families have the support they need to stay in the workforce. Alleviating the financial burden child care causes for working families is a political imperative that has bipartisan agreement, which is why we’re encouraged to see bipartisan, bicameral support in Congress for addressing this issue.
While the federal government provides two significant tax benefits to help offset child care costs — the Child and Dependent Care Tax Credit and Dependent Care Flexible Spending Accounts — both are badly in need of an update.
The Child and Dependent Care Tax Credit is a dedicated tax credit that helps families offset the costs of high-quality child care and early education programs. We strongly support the expansion of the credit, as well as efforts to make it refundable. Despite the obvious benefits of expanding and improving the child care tax credit, the recent tax reform proposals passed in the U.S. House of Representatives and introduced in the Senate this month would merely retain the credit as is.
Instead, the proposal marginally expands the Child Tax Credit, which is a different credit that can be used for any expense. In addition, the proposed expansion of the Child Tax Credit does not make it refundable, meaning millions of children from low-income families would not benefit at all. High-income families, on the other hand, would receive the largest increase in the Child Tax Credit.
It’s time for Congress to do more to specifically help working families afford high-quality child care and early learning for their children.
The Promoting Affordable Childcare for Everyone (S. 208 and H.R. 3632) Act — bipartisan legislation introduced in both the Senate and the House — would update the tax code to reflect the reality of the rising costs of child care. The Senate would be wise to include it in its final tax reform package. Doing so would ensure that families, particularly low-income families, receive the same tax benefits already available to middle- and upper-income families. And by tying both benefits to inflation, families will benefit for generations to come.
This common-sense legislation is a step in the right direction for working families in Maine and across the country. There’s nothing more important to our nation’s future than our children, and we must do what we can to invest in them and their futures. Please join us in urging the Senate to support the PACE Act, include it in tax reform legislation and ensure a brighter tomorrow for our kids.
Angus King, an independent, is the junior senator from Maine, and Mark K. Shriver serves as president of the Save the Children Action Network.
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