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You’ll Definitely Guess How Republicans Want to Pay for Childcare

Tax breaks for childcare will be a disaster. Luckily, we know a better way.

Bryce Covert

April 14, 2015

At Google, expectant parents may have plenty to worry about—how much sleep they’re about to lose, stroller brands, baby-proofing—but one thing they don’t have to sweat is taking time off. Both women and men are given paid leave for the birth of a baby—and when they come back to work, the company offers on-site childcare.

This is the latest installment in “The Score,” a monthly feature about the economy by Bryce Covert and Mike Konczal.

Most Americans aren’t as lucky as Google employees. Unlike most wealthy countries, the United States doesn’t guarantee paid family leave. We also do little to help families find or afford childcare. Senator Kirsten Gillibrand recently sought to address the problem by reintroducing the Family and Medical Insurance Leave Act, which would create a new form of social insurance: Workers would pay in a small fraction of their paychecks, and the government would guarantee a portion of their wages for 12 weeks to allow them to stay home with a new child. Meanwhile, President Obama has proposed universal preschool.

The conservatives’ solution to both problems, however, is one they use a lot: the tax code. Aparna Mathur of the American Enterprise Institute recently recommended supporting maternity leave through an expansion of existing tax credits for parents. Senators Marco Rubio and Mike Lee have also released a tax plan that purports to help working families by beefing up existing child credits.

So where’s the problem? Without the government setting the terms of these programs—telling employers that workers have to be given paid time off, for example, or ensuring there’s an adequate supply of quality childcare—parents will be left in about the same situation they’re in now. Just because you get a tax credit doesn’t mean it will cover the whole cost of childcare, which can run in the tens of thousands of dollars, or that your boss will encourage time off. Nor is there any guarantee of finding a good center with an open slot.

Families would also have to pay for childcare up front or else forgo a paycheck while on leave and then claim a tax credit later. And since there’s almost no way the funds could come through ahead of tax season, that puts a huge burden on families who already can’t afford childcare or time off.

Also, depending on how the tax breaks are structured, they will likely benefit the wealthy over the poor who need them most. Many tax breaks only apply to income that poor people don’t have, such as investments and mortgages. While the poorest families spend a larger share of their budget on childcare, deductible tax credits help only those families with a large tax bill from which to deduct them. The very poorest, who often owe zero in taxes, won’t see any extra help unless the credits are refundable, doled out despite a family’s tax burden.

Using the tax code to deliver these benefits is also inefficient. While we usually think of the United States as stingy in social spending, the country spends as much on its citizens as any other when we take tax outlays into account. But we don’t get as much bang for our buck: After the tax breaks and benefits are taken into account, the average income for America’s poorest is still just $5,900, compared to $9,600 for the poorest Danes and $8,200 for the poorest Swedes.

Embedding childcare benefits in the tax code has a political problem, too. Suzanne Mettler, a professor of government at Cornell University, calls policies that are invisible to most citizens but provide important benefits the “submerged state.” Paid leave and childcare doled out through taxes would likely fly under the radar, failing to create and sustain a supportive political constituency.

The one time that the United States had universal childcare was during World War II. It turned out to be wildly popular and effective, boosting women’s employment and increasing their children’s education level and earnings later in life. And just like Google, which saw its attrition rate drop 50 percent after it started its leave program, the economy stands to benefit from a bigger labor force with paid leave. But providing these benefits through byzantine tax cuts won’t deliver on that potential. Bryce Covert

Bryce CovertTwitterBryce Covert is a contributor at The Nation and a 2023 Reporter in Residence at Omidyar Network.


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