Childcare is a cost of working. And that cost is significant. In many areas around the country, basic childcare for two children costs more (sometimes much more) than $30,000/year. Yet the dependent care account limit remains only $5000. This means that many American families are paying over $500/month* in taxes on income going directly to childcare.
This added tax burden can tip the balance for many parents who would otherwise choose to remain in the workforce. Their reluctantly leaving the workforce results in lower tax revenue overall** and lost economic potential.
Help working families. Reduce taxes on childcare expenses.
* $25,000 taxed at 25%
** Based on lost income while a parent is not working, reduced future earning potential, and a lower tax rate for the working parent.