Saturday, June 6, 2009

The Cost of Child Care

Lately, I have felt little or no effect of the current economic downturn. My parents are stable and have weathered the financial problems that have affected so many people just fine. Until a short while ago when I was faced with a sudden opening. And I almost had the spot filled when the economy swooped in a forced the family to back away from what they saw as an excellent opportunity for their child.

This got me to wondering how parents are budgeting daycare and what can be done to improve the situation. Donna Norton at suggested that we support a bill traveling through the Senate that would increase the child care deduction to almost twice what it currently is.

This is an interesting topic. On one side we have those that feel as though taxes are already giving us quite enough (it is surprising that some of your readers would not like a tax deduction - the article didn't suggest a refund) and those like you that feel the government should help those less fortunate while helping those that can afford much more expensive and exclusive daycare situations. Those who commented seemed to be missing the issue, framing it as a tax issue rather than a quality care cost issue.

Can it be had both ways?

Possibly it already is. Those who earn more than poverty level wages are allowed a $1000 deduction per child as part of the Child Tax Credit. There is currently a bill in committee in the House looking to make this important credit indexed for inflation.

What price a child? Cold calculations can range from $170,000 on up to $350,000 per child. Should families look at these numbers decide not have children or should they treat them otherwise, as worthwhile expenses? While they are always as priceless as precious, they do have a cost attached.

Where the government should step in is to help providers lower their costs and improve their economic situation. Current government regulation put the cost of reimbursable meals at $1.92 (for breakfast, lunch and two snacks).

Often these providers are taking care of your children as the costs of care are rising and to fix that they must pass the cost of operating a safe environment for your child on to you. Insurance costs are among the most difficult to pass on and among the most difficult to avoid. Providers, the good ones at least, must be licensed (which may come with some improvements to what would normally be considered a safe-enough house) trained (on their own time after spending all day with your children) and certified (through inspections). All of these could be subsidized by the government relieving the economic pressures of the high cost of running a nurturing environment during these all important formative years.

Providing tax relief at the provider level would have a greater net effect on better care than offering similar tax deductions for parents who still must pay upfront.

This kind of tax break would have a twofold effect: the provider would be more willing to offer better care and you would pay less.

You can sign an online petition to help sponsor the Family Tax Relief Act of 2009.