65 percent of children under 6 years old have all of their available parents in the labor force. A new Plan

Child care costs are out of reach for many American families. Here’s a solution.

The high cost of child care is squeezing many middle-class families and preventing low-income families from reaching the middle class. Across the country, millions of working families struggle to find affordable, high-quality child care. For most of those families, child care is an economic necessity: 65 percent of children under 6 years old have all of their available parents in the labor force.

But child care is out of reach for the families who need it. The average annual cost of center-based child care now exceeds $10,000. Worse yet, the cost of care is rising while wages remain stagnant. In a majority of states the annual cost of center-based child care exceeds annual tuition and fees for a public four year university. And the U.S is falling behind its competitors with the third-highest child care costs among developed countries, leading to lower earnings for families and less economic growth.

childcaretaxcredit-PR

A new report from the Center for American Progress wants to change this by revamping the child care system to better support working families. Existing programs designed to help families afford child care, including the Child Care and Development Block Grant and the Child and Dependent Care Tax Credit, reach only a small portion of families and do not reflect the actual cost of center-based child care.

The Center for American Progress proposes a High-Quality Child Care Tax Credit to support economic security for low-income and middle class families and improve access to high-quality child care by:

  • Providing up to $14,000 per child to accurately reflect the cost of high quality child care. The credit would be paid directly to providers on a monthly basis to help families afford child care.
  • Asking families to contribute no more than 12% of their income. Family contribution would be determined on a sliding scale, with contribution capped at 12 percent of income.
  • Supporting quality child care. The credit would go to providers offering high-quality care. Parents would be able to choose the one that best meets their needs.
  • Complementing universal, voluntary preschool for all 3-and 4-year-olds. The High-Quality Child Care Tax Credit would complement CAP’s call for call for universal, voluntary preschool for all 3- and 4-year-olds, thus creating access to high-quality early learning programs from birth to kindergarten entry.

BOTTOM LINE: A lack of affordable, high-quality child care hampers economic growth by keeping parents from participating fully in the workforce. Our future workforce—today’s children—suffers when they are in low-quality, unstable child care. It’s time for the United States to follow the lead of other countries that have invested in child care to grow their economies and supports families with young children. The High-Quality Child Care Tax Credit will do just that.

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