Lower Priority
Republican aides on the tax-writing House Ways & Means Committee have discussed a child care tax deduction with the Trump administration. The proposal is not a priority for House GOP leaders, who made no mention of child care in their tax-reform blueprint released in June 2016. The blueprint vows to eliminate "carve-outs and loopholes," describing them as unfair and market-distorting, in favor of a flatter and simpler code.
“We’ve had some preliminary and very productive discussions with the Trump transition team and their desire to make child care more affordable for families,” the committee’s chairman, Kevin Brady, told reporters earlier this month. "So we’re exploring a number of options. They’ve brought some ideas forward, and it’s early in those discussions, but we’re having them."
The cost of the plan is a problem for Republican congressional leaders, who are already struggling to win consensus in their party on revenue increases to offset trillions of dollars in proposed tax rate cuts. A tax overhaul that adds to the deficit would likely have to be temporary, to avoid a Democratic filibuster in the Senate.
Policy Surprise
In her July 2016 speech at the Republican convention, Ivanka Trump promised that her father would "focus on making quality child care affordable and accessible for all" if elected president. The remark was a surprise; Trump had made virtually no mention of the issue during the campaign. Soon, Trump said he was working on a child care plan, with his daughter’s input, and released it in September.
The plan Ivanka Trump is pushing is broadly similar to the outline Trump released in September, with his daughter at his side. It would allow individuals earning less than $250,000 a year, or couples earning less than $500,000, to deduct the cost of child care expenses from their income taxes. Lower-income families without tax liability would get a rebate for their expenses in the form of a larger earned income tax credit.
The September proposal said the cost of the child care deduction could "more than be offset" by additional economic growth.
Trump said his plan also would guarantee six weeks of paid maternity leave by amending the existing unemployment insurance system. The measure would only apply to employers that don’t already offer paid maternity leave.
The leave plan would be "completely self-financing" by reducing fraud in the unemployment insurance program, Trump said in September.
Trump’s opponent, Democrat Hillary Clinton, decried the child care deduction as a boon to wealthier households with nannies and insufficient to help working families. Marcelo echoed that concern, saying the plan in its current form doesn’t help families whose incomes are too low to pay taxes and thus don’t benefit from deductions.
"It actually doesn’t help make child care affordable for the vast majority of working families,” Marcelo said. She hasn’t given Ivanka Trump her feedback on the plan yet, she said.
This article was provided by Bloomberg News.