Child care costs $17,000 a year for California parents. Would Biden plan help?
Imagine paying less than half of what you now pay for child care.
Or being among the thousands of parents who could send their 3- and 4-year-olds to free pre-kindergarten as the system expands.
Those and other ideas to make child care less expensive and more accessible are proposals Washington is seriously considering, with a big push from the White House.
But there are a lot of obstacles ahead before these breaks can become permanent or even last for years. How will all this be paid for? Can parents understand the maze of programs so they will know how to claim the breaks?
Members of Congress are struggling to understand the blizzard of potential benefits. Sen. Pat Toomey, R-Pa., a veteran lawmaker and member of the tax-writing Senate Finance Committee, had to think for a minute when asked how he would explain the proposals to constituents.
“It’s difficult to explain,” he then said.
This much is clear: A California family’s infant care costs average about $17,400 a year, the third highest cost in the nation. The price of child care for a 4-year-old averages about $11,475 annually, according to data from the White House and the Economic Policy Institute, which compiles statistics from several sources.
Help with child care
Here are the some of potential ways the White House plans, which Congress is now considering, would help California parents:
▪ The 7% cap. A four-person family earning less than $157,848 — 150% of the state’s median income, according to the Census Bureau — would pay no more than 7% of its income for child care under the Biden plan.
That means for a typical family earning the state median income of $105,232, child care costs would be capped at $7,366 annually, according to the nonpartisan California Budget and Policy Center.
A three-person family’s median of $91,605 would mean a cap of $6,412 in child care expenses. It’s not yet clear how the government would make up the difference to child care providers.
In California, children are now eligible for subsidized care if their families earn 85% or less of the median income—if they can get a space. That means about 750,000 children ages 0-2 are eligible, although many fewer actually get a space.
Under the Biden plan, all would have access, though precise details remain unclear, and another 300,000 would become eligible for the subsidized care, according to the Public Policy Institute of California.
▪ Pre-kindergarten. The proposal to provide universal free pre-kindergarten would benefit 3-and 4-year-olds. Currently, 243,000 children in California get that help. PPIC estimates it could grow to 1 million under the White House plan.
The state’s California State Preschool Program, Head Start, and Transitional Kindergarten now help fund some of those programs.
▪ Tax breaks for child and dependent care. Parents would get help in the future, as the plan would make this year’s increase in the child care and dependent tax credit permanent.
Families this year can get a credit for up to half of their spending on qualified child care for children under age 13, up to a maximum of $4,000 for one child and $8,000 for two or more.
That means that a family earning $105,332 and paying $7,366 for child care could subtract $3,683 from their taxes.
Families earning less than $125,000 annually can get a 50% reimbursement. Those with incomes of $125,000 to $440,000 could get a partial credit.
▪ Child tax breaks. The Biden plan would also expand the recently increased child tax credit through 2025. This year, it provides qualifying families $3,000 for each child 6-17 and $3,600 for those 5 and under through 2025.
Most of the benefits to Californians would go to households earning less than $51,700, according to the Institute for Taxation on Economic Policy.
Can Biden win this fight?
Child care advocates are hailing the potential changes as an important breakthrough.
“With the early learning and care provisions included in the (Biden) American Families Plan, there is no doubt that President Biden understands that child care is not just a kitchen table issue, but an essential pillar of the American economy,” said Sarah Rittling, executive director of the First Five Years Fund.
There are some concerns and obstacles to getting any of the breaks into law.
Mario Cardona, chief of policy and practice at Child Care Aware of America, said the tax breaks are “meaningful improvements to ensure families have the resources they need to access child care, and promote the health and well-being of their children.”
But, Cardona said, “They are not a replacement for a direct investment in child care. We will need sustained, robust federal investment to grow an affordable, accessible and equitable child care system that values the work of caregivers and serves all communities.”
There’s also concern about the cost. Biden proposes increased taxes on the wealthy to help pay for the proposal.
“The Biden administration is not proposing ways to reduce the cost of child care. They’re proposing ways to increase the cost of child care and have taxpayers pay more of the bill,” warned Andrew Lautz, director of federal policy at the National Taxpayers Union.
Republicans have shown no inclination to go along with raising taxes. The GOP lowered the top income tax rate from 39.6% to the current 37% in its 2017 tax cut bill, regarded as the signature achievement of the Trump administration.
The chances of the child care changes getting through Congress, though, remain favorable. The Senate could use a special budget process to pass the breaks that would require 51 votes for approval. The Senate Democratic caucus has 50 members, and Vice President Kamala Harris would break any tie.
This story was originally published June 1, 2021 at 8:00 AM with the headline "Child care costs $17,000 a year for California parents. Would Biden plan help?."
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