Child Care Tax Credits Counter-Productive

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(WOMENSENEWS)–Most corporations decline available state financial aid that would help employees find and pay for child care, according to a new review of state child care tax credits.

Twenty-eight states offer tax credits to companies that provide on-site child care or help employees find or pay for off-site care. The National Women’s Law Center reviewed 20 states and found that in five states, no companies claimed the credits and in 11 others fewer than six did.

The law center argued that the credits do not work because most corporations pay little state tax to begin with, and so tax breaks do not operate as effective incentives. More than 90 percent of companies in the states studied did not have enough tax liability to take full advantage of the credit.

Most women with children–about 79 percent of women with children over the age of 6 and 65 percent of women with children under age 6–work outside the home. Many of those women are in need of paid child care, which is often expensive and difficult to find, the report said.

The report’s authors argue that the tax credits, which were enacted in the 1980s and 1990s, take money away from more effective child care assistance programs.

This tax year will be the first year that corporations may claim a new federal tax credit for assisting employees with child care. No data is available on the effectiveness of the federal program, but the study authors argue that up to 98 percent of companies will not have sufficient tax liability to take advantage of the credits.

For more information:

National Women’s Law Center–
“Employer Tax Credits for Child CareAren’t Working, New Study Finds”:
http://www.nwlc.org/details.cfm?id=1244&section=newsroom


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