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Op-Ed: How Trump Can Help Families with High Cost of Childcare

The details of President Donald Trump’s childcare plan suggest it will mostly benefit high-earning, dual-income households

holly low
Holly Low

When I heard that Ivanka Trump was pushing proposals to make childcare more affordable, I was hopeful. A first daughter who knows what it’s like to juggle work and parenthood!

But when it comes to crafting policy, the devil’s in the details. And so far the details of President Donald Trump’s childcare plan suggest it will mostly benefit high-earning, dual-income households like Ivanka’s. While the administration is reportedly revising its proposal, and Ivanka Trump and Sen. Marco Rubio are pushing for a much-needed increase to the Child Tax Credit, we don’t know what the Trump team will ultimately get behind.

We do know, however, that under the initial proposal the most well-off Americans would enjoy nearly all the benefits — in fact, an estimated 70 percent would go to families earning $100,000 or more.

Instead of widening income inequality, lawmakers should target assistance to the low-income and middle-class families that need it most. They can start by improving existing systems that help working parents: the Child Care and Development Fund, the Child and Dependent Care Tax Credit, and the Child Tax Credit.

Helping families that need it most

New Jersey families who earn up to 200 percent of the federal poverty level, or about $40,000 a year for a family of three, can receive direct subsidies for childcare through the Child Care and Development Fund (CCDF). In New Jersey, this program assists 32,000 families every month so parents can work or go to school. (See childcarenj.gov for more information.)

However, federal funding for the CCDF is at its lowest level since 2002. In New Jersey, the subsidy falls below the prevailing market rate in every county, which can force families to choose providers based on price, not quality. A great start would be for the federal government to adequately fund this program — it’s the most direct way to help working families access quality care every month.

In addition to expanding direct subsidies, lawmakers should improve the tax credits that help cover childcare costs. The Child and Dependent Care Tax Credit helps working families pay expenses for the care of children, adult dependents, or an incapacitated spouse. In 2015, over 223,000 New Jersey tax filers received this credit. The amount depends on income; it can provide up to $2,100; the average American family gets a $550 credit. This would reach more low-income families if it were made fully refundable. In addition, Congress should raise the low ceiling for expenses, which doesn’t reflect the true cost of care, and index these limits to keep up with rising costs of living.

New Jersey policymakers should also join the 24 other states that already piggyback on this federal credit and provide some relief for this legitimate working expense. The best way to target this to the neediest families is to make the credit the most generous for the lowest earners, decrease the value as income goes up, and cap it at a reasonable income ceiling.

Boosting economic security

Many poor and low-income parents can’t afford to pay for care (they’re more likely to rely on help from family and friends) and don’t have access to subsidies or free programs. One of the best things we can do for these families is boost their economic security with an increased Child Tax Credit. This credit currently provides up to $1,000 per child under the age of 17, and is fully or partially refundable if the credit exceeds the taxes owed. Almost 70 percent of families with children already receive it, so the Child Tax Credit would likely reach more of these parents, and it would support families who have a stay-at-home caregiver.

These are just some of the policies that can address the lack of access to quality, affordable childcare in our country. In addition, we need expanded federal and state investments in high-quality preschool, which produces long-lasting positive impacts on children, supports working families, and has large economic benefits.

In the meantime, I hope Ivanka Trump will stay focused on the families who need assistance the most — it’s not just the moral thing to do, it makes economic sense too. When we help low-income families get ahead, and make it affordable for those middle-class mothers who want to work to do so, we support our workforce and grow our economy. It’s time for our country to treat childcare as the fundamental economic building block that it is.

Holly Low was the 2017 Kathleen Crotty Fellow at New Jersey Policy Perspective. She’s a graduate student in public policy at the Edward J. Bloustein School of Planning and Public Policy at Rutgers, and the mother of two young boys.

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