S.847 - Child Care Availability and Affordability Act (119th Congress)
Summary
S.847, the Child Care Availability and Affordability Act, proposes amendments to the Internal Revenue Code of 1986 to expand employer-provided child care credits and dependent care assistance exclusions. The bill aims to alleviate the financial burden of child care for families and encourage employer involvement in providing child care benefits.
The key provisions include increasing the amount of qualified child care expenditures employers can claim as a credit, raising the maximum credit amount, and allowing for jointly owned or operated child care facilities to qualify for the credit. It also increases the amount excludable for dependent care assistance programs and makes the household and dependent care credit refundable.
Furthermore, the bill introduces a new section to the Internal Revenue Code, Sec. 36C, which outlines expenses for household and dependent care services necessary for gainful employment, providing a credit against tax for eligible individuals.
Expected Effects
The likely effect of this bill is to reduce the financial strain on families related to child care costs. It also incentivizes employers, especially small businesses, to offer or expand child care benefits to their employees.
This could lead to increased workforce participation, particularly among parents, and improved economic stability for families with young children. The refundable nature of the household and dependent care credit ensures that even low-income families can benefit from the tax relief.
Potential Benefits
- Increased affordability of child care for families.
- Greater employer involvement in providing child care benefits.
- Potential for increased workforce participation among parents.
- Improved economic stability for low-income families through refundable tax credits.
- Support for small businesses in providing child care assistance.
Potential Disadvantages
- Increased government spending due to expanded tax credits and exclusions.
- Potential for complexity in tax code compliance for both employers and individuals.
- Risk that benefits disproportionately favor higher-income families if not carefully structured.
- Possible inflationary pressure on child care costs if demand increases significantly without a corresponding increase in supply.
- The effectiveness of the bill depends on employer participation, which may vary.
Most Disadvantaged Areas:
Constitutional Alignment
The bill aligns with the general welfare clause of the Constitution (Preamble), as it aims to promote the well-being of families and children. Congress has the power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States (Article I, Section 8, Clause 1).
The expansion of tax credits and exclusions falls under Congress's authority to regulate taxation. The bill does not appear to infringe upon any specific individual rights or liberties protected by the Constitution or its amendments.
However, the specific design and implementation of the tax credits and exclusions could be subject to scrutiny to ensure they do not disproportionately benefit or disadvantage certain groups, potentially raising equal protection concerns.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).