With Republicans controlling the White House and Congress, many expect major tax reform to pass this year. One provision almost certain to be included is child care assistance for working families. Not only did President Trump make it a focus of his social agenda on the campaign trail, but child care assistance is often viewed as a bridge issue between conservatives and progressives — conservatives because it supports work and family, and progressives because it expands government aid to the needy.
Republicans and Democrats should use this as an opportunity to pursue their goal of addressing poverty in the new Congress. It could be argued, as Republicans do, that the War on Poverty has failed considering that the same percentage of Americans are poor today as in the 1960s (13.5 percent in 2015 vs. 14.7 percent in 1965), according to the official measure of poverty.
The federal government has done a good job of reducing material hardship in recent years, but there is no denying that too few poor Americans work.
For these families, the affordability of child care can determine whether work is possible or not. Family responsibilities is the most common reason given for not working among poor families with children, even though almost half of financially struggling mothers say they want to work full-time. But when 40 percent or more of their earnings are needed to pay for child care — the average for low-income families — they may find it difficult to justify a job.
Meanwhile, our current system of child care assistance is failing to help most overcome this hurdle: only one-third of all eligible children in poverty and less than half of poor children under 5 receive child care assistance.
The just released edited volume, “A Safety Net That Works: Improving Federal Programs for Low-Income Americans,” from the American Enterprise Institute, includes a chapter on how to improve America’s child care assistance system. In that essay, I recommend expanding the child care tax credit to poor and low-income workers with young children as a way to boost employment rates and improve the quality of child care for poor families. For families with children under 5 (the most critical and expensive years for child care), the existing child care tax credit should be made refundable, providing it to families with no federal income tax liability.
Increasing it to cover a larger percentage of actual costs (50 percent, or more, up to $5,000 per child) and providing it in monthly payments rather than a lump sum at tax time would also make it more effective. My estimates suggest that this would cost up to $9 billion per year, which would almost double what is spent on child care assistance for low-income families. Finding 1.2 percent to pay for child care assistance in a federal budget with more than $700 billion already dedicated for low-income Americans seems entirely doable.
Angela Rachidi is a research fellow in poverty studies at the American Enterprise Institute. She wrote this for InsideSources.com.