Republican presidential nominee Donald Trump’s plan to help families cope with child care costs has the potential to trim household bills, but low-income workers are unlikely to realize the full benefits, and some people could be discouraged from joining the labor force.
Trump’s proposed child care savings accounts, which he outlined Tuesday in a speech in Aston, Pa., would be tough for poor Americans to take advantage of because they could have difficulty coming up with the tax-deductible contributions.
Stay-at-home parents would receive the same tax deduction as working parents, the campaign said Tuesday, a policy that raises questions about the incentives to join the labor force.
That would leave the plan’s effect on the broader economy mixed, with Trump also proposing to alleviate child care costs through tax deductions and rebates, and a mandated six weeks of paid maternity leave. While varying widely by state, child care bills outpace rent and tuition in most of the country.
“If you’re low income, it’s not like you can float $1,200 until you reach the tax refund,” said Michael Madowitz, an economist who has studied child care cost issues at the Washington-based Center for American Progress. Still, the initial details of the plan are “a good effort,” he said.
Trump’s campaign said that lower-income parents would benefit from a government match of the first $1,000 deposited per year, as well as child care spending rebates through the existing earned income tax credit.
“It’s pro-family, it’s pro-child, it’s pro-worker,” Trump said. “These are the people we have to take care of.”
Clinton has offered her own plans to alleviate child care costs, including an expansion of the child tax credit and a subsidy for prekindergarten for all 4-year-olds. She has pledged to limit the costs of care to no more than 10 percent of household income, but has offered few details about how to guarantee that.
Aparna Mathur, a resident scholar at the conservative-leaning American Enterprise Institute in Washington, also found reasons to cheer Trump’s elevation of the issue while raising questions about how his plan would work. “I like the fact that there is a Republican candidate talking about paid leave,” she said.
At the same time, Trump’s pitch to focus on maternity leave might run afoul of the gender neutrality in the Family and Medical Leave Act, and also could unintentionally set back gender parity in the workforce by discouraging employers from hiring women, she said.
The number of stay-at-home fathers nearly doubled to 2 million in 2012 from 1.1 million in 1989, according to Census Bureau figures compiled by the Washington-based Pew Research Center.
Trump’s proposals build on tax and regulation details he outlined in a speech last month at the Detroit Economic Club and on his daughter Ivanka Trump’s promise at the Republican National Convention in July to make child care “affordable and accessible for all.”
Mathur praised the idea of expanding the tax credit but remained concerned that the latest plans might provide too many hurdles for low-income Americans to benefit, including needing the cash to make the proposed dependent care savings account worth it. And Mathur doubts that Trump can implement the policies without raising taxes.
The proposed rebate through the earned income tax would require changing a current law that caps the credits’ financial benefit, said Elaine Maag, a researcher at the Urban-Brookings Tax Policy Center in Washington.
Trump policy adviser Stephen Miller didn’t immediately respond to e-mailed requests to clarify how the average cost of care per state would be determined and the potential impact of equalizing benefits for stay-at-home and working parents.