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Republican tax bill would end flex spending accounts for child care

Working parents would no longer be able to use pre-tax money to help pay for child care under a plan released by Republicans in the U.S. House of Representatives on Thursday.

Gone would be the flexible spending accounts that allow working moms and dads to put pre-tax money toward $5,000 worth of child care costs annually.

Rep. Lynn Jenkins, R-Kansas, a Ways and Means member, said Republicans who wrote the bill felt they made up for doing away with flex spending accounts by adding new credits, deductions and rate cuts.

The Republican plan would increase another per-child tax credit from $1,000 to $1,600 and add a new $300 credit for each parent and non-child dependent in a household, such as a grandparent. And it would retain a different tax credit that helps families pay for child care.

“We’re boosting family-focused tax benefits...to help families keep up with the rising costs of child care, higher education, and looking after their loved ones,” said Rep. Kevin Brady, R-Texas, chairman of the House’s tax-writing Ways and Means Committee.

Jenkins said that families would not be hurt because they would get other new tax breaks.

“We just feel like we covered all the bases. I can’t believe anyone is not going to feel a significant benefit from keeping more of their money in their pockets after the reforms are in place...Holy smokes, that’s a pretty good improvement,” she said.

Advocates for working parents as well as some Republicans weren’t pleased, however.

Rep. Kevin Yoder, R-Kansas, wanted to raise the amount of pre-tax dollars that families can put into flexible spending accounts used for child care from $5,000 to $7,500. Although the bill eliminates those accounts, Yoder remained hopeful they can be saved.

The GOP tax bill must pass both the House and Senate before being signed into law. Thursday’s language is the first public draft. Republican lawmakers plan to begin formally writing the legislation on Monday.

Yoder also had been lobbying Republican leaders and the White House for an increase to the child and dependent care credit, which taxpayers can claim for expenses of between $3,000 and $6,000 to provide child care that enables parents or guardians to work or look for work.

Yoder did not get the increase he wanted, but the credit survived.

The bill’s per-child tax credit increase from the current $1,000 to $1,600. President Donald Trump’s daughter Ivanka, along with Sen. Marco Rubio, R-Fla., had sought a significant bump. The relatively small change provoked some backlash.

“House #TaxReform plan is only starting point. But $600 #ChildTaxCredit increase doesn’t achieve our & @potus goal of helping working families,” he tweeted.

“Ivanka was promising to help relieve the pain of childcare costs in this country,” said Elyssa Schmier, senior campaign director for national early learning and budget for MomRising, a nonprofit national advocacy group.

“This does nothing to do that because the average family’s costs for child care in this country is anywhere between $7,000 to $20,000 a year, it depends on where you live,” Schmier said. “So $600 does nothing.”

The White House said in a statement that the administration is encouraged by the expansion of the child tax credit and the preservation of the child care credit.

“With respect to the process, President Trump said: ‘We are just getting started, and there is much work left to do,’” the statement said. “Cabinet members and senior officials from the administration including Ivanka will be hitting the road in the coming weeks to continue to highlight how comprehensive tax reform will help working families.”

Lindsay Wise: 202-383-6007, @lindsaywise

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