Donald Trump unveils proposals to make childcare more affordable
PHILADELPHIA — At a speech in Philadelphia Tuesday evening, Donald Trump will unveil a plan to make childcare more affordable for American families.
According to a Trump policy aide, Trump will focus on his plan to make all childcare expenses deductible. This idea was originally met with criticism because it would have disproportionately helped those with higher incomes. The plan now would be available to individuals making up to $250,000 a year or couples with income of up to $500,000. The benefit itself would be proportional to income and would be capped at the average cost of childcare at $12,000.
The Trump aide said the new plan combines several different policies and would treat childcare as a deductible business expense. Stay-at-home mothers would also be able deduct childcare expenses from their taxes.
“Motherhood, not gender, is the greatest determinate of wage disparity in the workplace,” the aide said on a conference call with reporters. “We want to end economic punishment for motherhood in the United States.”
There would also be additional tax incentives on the employer side to provide on-site childcare. Some incentives currently in place have been ineffective because they’ve been hampered by “very complicated regulations,” said the Trump aide.
Those who have no tax liability, who on the low end of the income scale, would be allowed to claim an expanded Earned Income Tax Credit (EITC), equivalent to half of their payroll tax contribution.
In addition to the childcare expense deduction, Trump would also guarantee six weeks of paid maternity leave. This, the aide said, would be paid for by eliminating fraud in the unemployment insurance program, estimated to be about $3.4 billion.
Trump would also offer dependent care savings accounts available to everybody in the U.S. Those on the lower end of the income scale, would see the government contribute $500 for every $1,000 contributed by individuals. Everybody else would be allowed to contribute up to $2,000 to this account tax-free, and this flex spending account could be rolled over each year.
For those receiving the EITC, there will be a box they can check on their tax returns in which some or all of the EITC can be deposited into this account. The Trump campaign suggested that money for this account could also be used for tuition at private schools.
The Trump campaign did not put a price tag on the childcare proposals but claimed that they would be absorbed revenues from Trump’s tax plan and would ultimately be deficit-neutral. The plan was built under an assumption of dynamic scoring, which builds into economic policy models the predicted reaction to policy incentives. The Trump campaign plans to release its score for Trump’s tax plan later this week, and Trump is expected to deliver a more comprehensive speech on his economic plan later in the week, as well. The Congressional Budget Office, which uses static scoring, does not recognized dynamic scoring.
Trump’s daughter, Ivanka Trump, talked broadly about the issue in her Republican convention speech in July, and the GOP nominee officially introduced the policy at his economic speech in Detroit.