Child Care Benefits

As every parent knows, child care is expensive, whether parents have to pay someone else to take care of their child or one parent forgoes the income from working to assume care duties.  Under current tax law parents can take up to $3000 per child ($6000 max) for qualifying child care expenses. If one parent does not work or works only part time, that lost income does not qualify as a legitimate expense.

The current system is one of many income redistribution schemes that follow a complicated set of rules  that undermine a family's major life decisions in  return for government benefits.  I propose that these tax credits be turned into tax deferments for parents under a certain income threshold based on the median household income of their area.¹  Under this proposed system, parents could defer a certain amount of taxes while they were raising children.  The tax burden would not go away as it does under the current system but the parents would have full control of the amount of taxes they deferred up to the set annual limits.  The taxes would accrue interest free while the parents are taking on the financial burden of child care and could be paid back over a long time period like ten or twenty years.

1.  Note:  Median household incomes, and living expenses, in large metropolitan areas like New York City can be 10% higher than the national average. (Census Bureau)  Income thresholds should be set accordingly, not a one-size-fits-all dollar amount common in many benefit programs.