Should the federal government increase child tax credits? It is an issue worth debating. So is the potential replacement of welfare programs with a basic per-person allowance for households.
Conservatives are having a good debate about the goals and consequences (intended and unintended) of such aid policies. Theoretically, there is room for bipartisan compromise on how to help parents.
But there is no good argument for simply subsidizing day care.
The Biden administration and the Democrats in Congress seem dead-set on creating a new federal subsidy for parents who opt to pay commercial child care providers to watch their children while they work. The current tax code already includes provisions that are biased against stay-at-home parents. To exacerbate that with day care subsidies is discrimination, plain and simple: social engineering in favor of taking young children out of their parents' care.
Imagine two couples with three young children. One couple opts to work two full-time jobs and pay for day care. The second couple opts to forgo some income by having the wife stay at home — but avoids the costly child care. Perhaps the husband in this scenario recoups some income by taking a less pleasant or less flexible job that pays more.
Both the dual-income and the single-income couples get three child tax credits, and both pay taxes in the “married filing jointly” category. But the dual-income couple gets a tax credit that the single-income credit can’t get: the Child and Dependent Care Credit. This is a $3,000 tax credit per child (for the first two children) to cover the cost of day care.
If couple No. 2 spends money on day care so that the mother can take the older two children to the zoo or so that both mother and baby can nap or so that the mother can pack for a family vacation, then no tax break.
Another stay-at-home penalty: Such a parent cannot put money into an IRA or 401(k) if the person has no income. A working father can’t even put money into his wife's accounts for her.
Congress ought to fold the Child and Dependent Care tax credit into a child tax credit, so that stay-at-home parents aren't punished for in-sourcing the care of their own children.
Unfortunately, Democrats want to make the discrimination against stay-at-home parents even worse. Biden has proposed a subsidy worth up to $14,800 for families that pay for commercial day care while making up to 150% of their states' median income.
As with Sen. Elizabeth Warren's plan for “universal child care, ” Biden wants to subsidize day care instead of simply giving parents more money. Why? Because Democrats don’t want to put the option to stay home on equal footing with day care. They know that, overwhelmingly, it would be mothers who choose to care for children full-time, and these are the very complementary gender roles that they want to eradicate.
We believe that stay-at-home parents are good for the next generation. Everyone should want more of them. And both surveys and Labor Department statistics show that mothers, on net, want to do fewer hours of paid work and spend more time as mothers.
To the extent possible, we should want more parents at home because it's good for their children and their communities.
Does Biden believe that parents are the best carers of their children? If so, then why subsidize commercial day care providers? Why not just offer parents a neutral tax credit and let them decide how it will be spent?
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