State and local chambers of commerce, including the Arizona Chamber of Commerce & Industry, as well as the U.S. Chamber of Commerce, along with a coalition of more than 80 national organizations, corporations, and small businesses recently sent a letter to Congress calling on lawmakers to help make child care more affordable by updating the U.S. tax code.
Signers note three specific provisions that would help increase access to child care, benefiting working parents, children, and job creators: Child and Dependent Care Tax Credit (CDCTC), the Dependent Care Assistance Program (DCAP), and the Employer Provided Child Care Tax Credit.
“The availability of affordable child care is increasingly becoming a major issue for business,” Chamber President and CEO Danny Seiden said. “Employers are ready and willing to explore new options for helping parents enter and stay in the workforce, which means helping to find childcare options that work for families. The lack of affordable childcare options is a barrier to the workforce entry for too many parents. If willing workers are sidelined for reasons such as lack of child care, then the U.S. economy isn’t working at its full potential.”
The coalition in its September 12 letter writes, “Even if parents could afford child care, supply is limited. Nearly one in three (31.7%) children with both parents in the workforce do not have access to formal child care.”
Of particular interest to job creators is the Employer Provided Child Care Tax Credit, also known as 45F, which encourages businesses to help their employees locate child care and increase the number of child care slots available in their community.
Current law provides employers a nonrefundable tax credit of up to 25% of qualified child care expenditures and 10% of qualified child care resource and referral expenditures. The credit maximum is $150,000, meaning businesses must spend $600,000 to receive the full credit.
According to the GAO, uptake of the credit is low. Reform advocates have recommended making the tax credit full refundable, increasing the credit rate and maximum credit, and simplifying the process for applying for the credit.