Child Care Tax Plan Misses the Mark for Americans Who Struggle the Most

By Hannah Matthews

Following widespread criticism that its benefits were weighted toward the very wealthy, the Trump Administration appears to be pivoting from an earlier child care tax deduction proposal to one based on tax credits. This proposal is couched within a blueprint for tax reform that would give enormous tax cuts to wealthy Americans and corporations. But a modest step towards addressing child care affordability for some families cannot compensate for the Administration’s overall tax and budget proposals that put low-income families at grave risk of economic insecurity and hardship.

The new child care proposal is reported to expand the value of the Child and Dependent Care Tax Credit (DCTC) and potentially make it refundable so more low-income families could benefit. The DCTC allows parents to claim a tax credit for a portion of their child or dependent care expenses. Details of the plan are not yet available, along with other components of the proposal. A plan to improve the DCTC would be markedly better than the prior tax deduction proposal; yet, this proposal on its own would likely leave millions of low-income working families still struggling to pay the high costs of child care. 

While the DCTC should be improved to broaden its reach and increase its benefit, such improvements must be coupled with an expansion of the federal Child Care and Development Block Grant (CCDBG) to help those who struggle the most. CCDBG provides direct assistance to low-income families to pay child care costs up front and also provides funds to states to improve the quality of available child care. Direct assistance is vital for families to afford the upfront weekly or monthly costs of child care. Yet, due to insufficient investments, CCDBG assistance reaches fewer than one in six children eligible for help.

Setting aside the child care proposal, Trump’s overall tax reform plan would reduce revenues to fund critical government programs—including child care assistance and other important supports that low- and moderate- income families rely on to make ends meet. Additionally, last month’s budget outline by President Trump proposed an 18 percent cut to the U.S. Department of Health and Human Services budget, which would hamper necessary investments in CCDBG, Head Start, and other programs that struggling families rely on to give their children a strong start in life. Trump’s budget proposal would also eliminate the 21st Century Community Learning Centers program that provides critical summer, before-school, and after-school child care for low-income children and youth.

The Trump child care plan may be transforming, but the President’s overall vision for America has not. His tax and budget proposals provide significant advantages to the wealthy and would leave millions of low-income Americans in jeopardy, threatening their children’s well-being and their families’ economic security.