Congress returns to Washington this week to a meat grinder: In short order, members must raise the debt ceiling, pass a budget (to avoid a government shutdown) and deliver emergency relief to the victims of Hurricane Harvey. So it might seem unrealistic to suggest that they strike a bipartisan deal on child-care tax credits.
Yet this is precisely the kind of small but meaningful legislation that would show the American public that Congress is, in fact, capable of doing something — and, not incidentally, it would measurably improve the lives of millions of American families.
A House bill introduced by Republican Kevin Yoder and Democrat Stephanie Murphy would expand and update the Child and Dependent Care Tax Credit, which was created in 1976 and allows parents to offset child-care expenses incurred while they work or go to school. Though well-intended, the policy has outlived its effectiveness: The maximum benefit of $2,100 for a family with two or more children has remained constant since 2001, during which time child-care costs have increased by more than 20 percent, and the tax credit is not refundable.
The new legislation, which mirrors a bill introduced in the Senate by Republican Richard Burr and Angus King, an independent, addresses those flaws. It increases the value of the credit, from 35 percent to 50 percent of total child-care expenses for the lowest earners, and indexes it to inflation. Critically, the bill makes the child-care tax credit refundable, which means that a family of four making less than $15,000 annually could receive a rebate check of as much as $3,000.
From the standpoint of public policy, the Yoder-Murphy plan is modest. When it comes to political feasibility, however, that’s a virtue. The Joint Committee on Taxation estimates that the bill will cost the government an additional $37.2 billion over 10 years — not trivial but not extravagant either, especially compared to the assortment of tax breaks that disproportionately benefit the wealthy.
Making the credit refundable will allow 6 million more taxpayers to benefit from it. The portion of overall benefits that flow to families making $30,000 or less would more than double, to 15 percent. They won’t, however, reach everyone. Because only households with out-of-pocket child care expenses are eligible to claim the credit, the Yoder-Murphy bill leaves out poor families with a stay-at-home parent or those who rely on unpaid relatives to take care of their children. Nonetheless, the bill manages to pull off a rare feat: it enlarges the safety net while promoting social policies that reward work.
The American public, with good reason, has lost any confidence in the ability of Washington politicians to work together on even the most common-sense reforms. Taking action on child-care affordability would be a small step toward restoring that faith.
Lawmakers shouldn’t pass it up.
— Bloomberg News