Tax Reform Now! Part 2

Federal policies have resulted in a labyrinth system of childcare credits and exemptions that are arbitrary and unjust:

〈             While the tax law has a credit for child care expenses, the maximum credit for 2006 was only $1,050 well below most families’ actual expenses.  Further, there is no tax relief for uncompensated care provided by a relative, friend or family member.

〈             Parents lucky enough to work for an employer who provides a flexible spending account may set aside up to $5,000 of annual pretax wages to purchase child care services.

〈             Employers can provide an unlimited amount of day care on-site all tax-free; however, if the employer provides additional compensation to the employee to purchase day care services, the benefit is taxable. 3

If the labor market were truly free, the needs of working parents would be factored in.

Two wage earning parents might not necessarily wish to work the same exact hours outside of the home, so an arrangement of flexi-time would be beneficial to them. Consequently, if each parent could be home a third of the time this alone would dramatically reduce childcare costs. It would also provide the children with more consistent care. Rigid tax and employee benefits laws make such arrangements generally impossible for people who need health insurance, pensions and other benefits.

(footnote sources furnished upon request)
Next … should we have a national Nanny register?