Donald and Ivanka Trump today unveiled new child care policy proposals in Aston, PA. The policies would reform the tax code and provide six weeks of paid maternity leave.
Trump’s tax code proposal would allow individuals or couples to deduct the average cost of child care in their state from birth through the age of 13, whether they take the standard deduction or itemize. It would cover up to four children, though individuals earning more than $250,000 per year or couples earning more than $500,000 would not qualify. Stay-at-home moms could take advantage of the proposed deduction. Elder care up to $5,000 per year would also be deductible.
Low-income workers who have no net tax liability would have a larger Earned Income Tax Credit, up to 50% of their payroll tax.
“Dual-earner families were not prevalent in 1949 when the current tax regime for families was put in place. Today, however, almost two-thirds of married couples are dual-earners, more than twice the number of single-earner married couples.”
Dependent Care Savings Accounts
Those of you familiar with flex accounts offered in many work places will understand this proposal. Families would be able to contribute up to $2,000 per year to these accounts for child and elder care – completely tax free. Unlike flex accounts, these are not employer-dependent. Families can contribute to sub-accounts for each dependent, including unborn children. “Balances in a DCSA will rollover from year-to-year so that substantial amounts could be accumulated over a period of years.”
Unused money can be put toward higher education when a child reaches the age of 18. Furthermore, low-income families would receive a 50% match up to $1,000 per year.
“When established for an elderly dependent, the funds can be used for adult day care, in-home or long-term care services.”
Family and Community Child Care
“The Trump plan will reduce regulations that disproportionately favor center-based care to create a new, dynamic market for family-based and community-based solutions. Families will be given the power and information to choose who will be providing care and where that care will be provided without fear of loss of government benefits. The marketplace will be free to develop alternatives that provide care where needed, and at the times when people who work irregular hours need care.”
Job-Based Child Care
The Trump plan builds on a 2001 bipartisan incentive for on-site child-care. “That law gave companies that provide appropriately-licensed on-site childcare centers a tax credit of up to 25 percent of facility expenditures, plus 10 percent of resource and referral costs, up to a limit of $150,000 per calendar year; a portion of the credit is recaptured if the center is kept in service for less than 10 tax years. The Trump plan would increase the cap, shorten the recapture period, and devise ways for companies to pool resources in order to make the credit more attractive.”
Six Weeks Paid Maternity Leave
The Trump plan would provide six weeks of paid maternity leave through the Unemployment Insurance system. The cost would be offset by reducing the $5.6 billion per year in improper payments.
Trump said his proposals would receive bipartisan support. He detailed the policy in a position paper posted today.