I have an op-ed in US News that digs into Donald Trump’s new child care proposal. The details are sketchy and seem to change by the minute, but I did my best to run some numbers on this. Based on the most generous assumptions I could use, Trump’s plan will not make child care affordable for low- and middle-income families (HHS says child care costs above 10% are unaffordable), but it will be a nice windfall for richer households that get the most benefit.
Even after deducting $18,000 in child care costs under Trump’s proposal and claiming the existing Child and Dependent Care Credit, a typical family making about $62,000 with an infant and a preschooler would still need to pay 23 percent of their income to place their kids in a child care center – not even close to affordable. Even if this family has just one infant and pays $10,000 for a child care center, child care costs would still consume 13 percent of their income. But it gets even worse: a tax break that arrives the following year at tax time will not make ends meet for families who need to pay for child care up front.
Low-wage workers fare even worse under Trump’s plan. Since these families will not benefit from Trump’s tax deduction, Trump has proposed a rebate worth up to $1,200 per family. But this is not nearly enough to make child care affordable for these families. Even assuming that a family with two parents working at minimum wage gets the full $1,200, they would still need to spend 55 percent of their income to place an infant and preschooler in child care centers. The same family would still need to spend 27 percent of their income if they only need child care for the infant.
By the way, it now looks like the minimum wage family in my example only gets a rebate of about $600, not the full $1200. So it’s even worse. The full column is at US News.