Senators Introduce Significant Boost to Child Care Tax Credit

Four Democratic senators introduced a bill on Tuesday to increase the tax credit that helps working families cover their child-care costs.

The Helping Working Families Afford Child Care Act, introduced by Sens. Patty Murray (WA), Kirsten Gillibrand (NY), Jeanne Shaheen (NH), and Barbara Boxer (CA), would increase the Child and Dependent Care Tax Credit by nearly three times the current maximum benefit, and would close a loophole that leaves many low-income families ineligible.  

“Updating this tax credit to reflect the needs of families in today’s economy would be a critical step forward in terms of our larger effort to make sure working parents—dads and moms—have a fair shot,” Sen. Murray said on the Senate floor.

Murray noted that full-time child care for just one child can cost $10,000 annually, and that families below the poverty level may spend up to a third of their income on child care. In 2012, the cost of child care in the United States grew up to eight times faster than family income.

“For working parents juggling work and family obligations, access to affordable child care is a necessity,” Shaheen said in a statement. 

The new bill would give parents a tax credit equal to 20 percent of their child-care expenses—worth up to $1,600 for one child, or $3,200 for two or more children. Furthermore, the tax credit would be fully refundable to ensure that low-income families who pay no federal income taxes would still be eligible for the benefit. The raise would be paid for by gradually phasing out the tax credit for families earning more than $200,000, a limit that would be indexed to inflation.

Democrats have been vocal in recent months about pushing the importance of working women, and the financial support they give their families, to the overall economy. Murray held a hearing in May to discuss barriers to women’s success in the workplace. Given that the United States is the only high-income nation not to offer guaranteed family leave, Gillibrand sponsored the FAMILY Act, which would use modest employer and employee contributions to fund a self-sustaining paid family and medical leave insurance program. President Obama passed an executive order to help address the gender wage gap, and cited the disproportionate number of women working low-wage jobs when he raised the minimum wage for federal contractors.

The message from Democrats is that a comprehensive set of policies—like making child care more affordable, ensuring access to contraceptive care, closing the wage gap, raising the minimum wage, and providing relief for student debt borrowers—are needed to improve women’s economic security, and in turn the economic security of their families and the overall economy. It’s a message designed to appeal to single women in the midterm elections, and a message likely to fall on deaf ears in the Republican-dominated House of Representatives—which is why many advocates are pushing for Obama to do even more for working families through the use of executive orders.

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  • red_zone

    This will be great for so many families.