I’ve petitioned the White House to offer equal benefits to stay-at-home parents when proposing childcare credits

Elizabeth S. - posted on 02/17/2015 ( 2 moms have responded )

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The Obama administration has recently asked Congress to increase the childcare tax credit to $3000 per child.
I agree with supporting families, but I don’t think the proposal should stop at helping parents who are paying for childcare. Just as some families have to go out of pocket for the cost of childcare, families with a stay-at-home parent (SAHP) are also making do with less money by living on one income.
If a couple with two young children could manage to have a parent stay home with the assist of a $6000 tax break, I think it’s wrong to have a policy in which the government says “Sorry, but if you both go to work we can give you that $6000 for childcare costs.”
So I’ve started a petition at the White House website asking that families with stay-at-home parents be offered benefits equal to what other families would get for purchasing childcare.
Lots more signatures are needed, so please go to the link, sign, and spread the word!
Two things for the record:
(1) This discussion is about families which do have income. The White House proposal is for a non-refundable tax credit, which is only helpful to families which have enough earnings to owe federal income tax. Support for very low-income or unemployed parents would be a separate discussion.
(2) I’m not in line for any tax break myself. My children are in their twenties and I don’t have grandkids. I’m doing this because I was a stay-at-home mother and I care about equal respect and support for stay-at-home parents.

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Elizabeth S. - posted on 02/20/2015

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Jodi,

I appreciate your thoughtful comments. It's definitely a complicated subject.

The President's proposal is that a family would get up to $3000 per child as a tax credit to offset the cost of childcare. If a married couple with two young children had no other deductions at all (mortgage interest or whatever), they could earn up to $87,000 and the childcare credit would completely wipe out their joint federal income tax obligation. (I'm using the TurboTax "Taxcaster" online -- a married couple filing jointly with two young children has a tax obligation of $5916 before taking childcare costs into consideration, so that would be totally eliminated by a $6000 credit.) If they had other deductions, their income could go even higher with zero federal income tax due.

By the time a couple's federal income tax obligation has been reduced to zero, I don't think the government's message can be characterized as "you're the ones paying taxes, so we'll give you a tax break." It's more like "you're buying childcare, you're excused from paying taxes."

The President has proposed this tax credit as an assist to the middle class, to be phased out at $120,000 of income. I think we can also look at this in terms of how much taxes a family with two young children pays if it has one earner and one SAHP, versus if it has two earners and buys childcare. Let's say the one earner makes $60,000. Taxcaster tells me the government would receive $1866 in federal income taxes from this family. If the second spouse goes to work to earn $40,000, the federal tax obligation on a $100,000 family income (not taking childcare costs into account) would be $7866. Now the family purchases childcare and gets a $6000 credit -- we're back to the government receiving $1866 in federal income taxes. Essentially no income taxes at all were received by the government for the second earner, which again makes it hard to characterize as -- you're paying in so we'll give you a break.

I do appreciate that there are many ways to look at this. Here's how I look at it: a family with children has to "pay" for childcare either by having someone stay home and take in less income, or by purchasing childcare. If we leave matters to the "market," the one family's wallet is thinner due to less income, the other family's wallet is thinner because they have to pay someone else to care for their children. To me the childcare tax credit says the second family should be relieved from market conditions, that the resource of the caregiver's time should essentially be available to them at a discount. To do that without also offering relief from market realities to the first family is to me inequitable.

Jodi - posted on 02/20/2015

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I've come and gone from this thread several times because I've really been thinking about it.

My Conclusion - While I can totally see your point about SAHMs.....Are SAHMs also prepared to pay an equal amount of tax? The reason there is a tax break for those paying for childcare is because they pay tax in the first place. Now they get a break on that. If SAHMs want equal rights, then they also need to make equal contribution financially as well.

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