The cost of child care for low-income Americans is debilitating. For the middle class, it is a significant and escalating strain. For the wealthy, it’s closer to a bother than a burden.
Yet if a proposal by Donald Trump were to be put in place, it’s the latter group that would receive the most help from the federal government.
During his economic policy speech last week in Detroit, the Republican presidential nominee correctly identified the cost of child care as a largely unaddressed problem facing American families. However, as a remedy, he is suggesting that parents be allowed to deduct the full cost of child care from their taxes, a plan that would reap substantial benefits for the upper class while leaving the poor behind.
As it stands now, parents are eligible for a tax credit of up to $3,000 for one child and $6,000 for two or more. That’s fully refundable, meaning parents can get the credit whether they have an income tax liability or not.
Trump’s plan, as it appears now, is to raise the limit significantly, to the “average cost of child care spending,” but make it a deduction.
That distinction is important. Deductions help only people who have an end-of-the-year income tax liability, meaning that they are of no use to most low-income Americans and many in the middle class, who may have some liability but not enough to benefit from the high ceiling on Trump’s proposal.
Deductions in general favor the wealthy, who end the year with high tax liabilities and generally itemize their taxes, and who are rewarded based on the high marginal tax rates that they pay.
In the case of child care, a deduction would favor those who spend a lot in real terms, not those who spend a lot as a percentage of their incomes, which is where the problem lies.
People in poverty pay over a third of their income on child care, while those just out of poverty pay more than 20 percent of their incomes for child care. In Maine, one of the 10 least affordable states for child care, it costs around 37 percent of the median income for a single mother.
Under Trump’s plan, single mothers and people in poverty and near poverty would see little to no benefit, while the wealthy would receive a much larger tax break than they see now.
That raises a lot of questions about the economic viability of Trump’s plan, especially when considered alongside the mammoth tax cuts he is also proposing for the rich.
But more than that, it is morally wrong.
The skyrocketing price of child care, and its disproportionate impact on the poor and working class, is forcing people out of the workforce and children into suboptimal care arrangements. It is robbing children of care that can help them do better in school, and make them less likely to need special education and more likely to attend college.
To reduce the impact of those high costs, universal pre-kindergarten for children as young as 4, as well as expanded tax credits aimed at the lower and middle class, would do a lot more than what amounts to an expensive handout to wealthy families.
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