Tags: child | care | income | tax

Escalating Child Care Costs Are Eating Up Household Income

Thursday, 14 Nov 2013 07:33 AM

By John Morgan

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Child care costs in the United States are mushrooming to take over a larger and larger piece of family income, but the accompanying tax breaks have not budged in a decade, according to MarketWatch.

Part of the reason for the shrinking tax break, which aids working parents and helps them stay in the work force, is political.

While President Obama has proposed expanding the child care and dependent care tax credit, conservative opponents in Congress say the problem should be taken care of by lowering overall tax rates.

Editor’s Note:
Retired Americans Slammed by Obama’s Redistribution Plans

The result? It's status quo, as neither side can prevail and, meanwhile, child care costs have grown at eight times the rate of household income over the past year, MarketWatch reported.

"Child care is an increasingly difficult financial burden for working families to bear," said Lynette Fraga, executive director of Child Care Aware of America. "Unlike all other areas of education investment, including higher education, families pay the majority of costs for early education."

According to the Census Bureau, child care payments for families with working mothers rose 50 percent between 2002 and 2011, to an average of $7,400 per year.

The federal tax credit has been unchanged since 2003 and, adjusting for inflation, has actually fallen since then. Families receive a tax credit of 20 percent on child care up to $3,000 for one child and a maximum of $6,000 for two or more children.

In most states, child care costs exceed 25 percent of median income for single parents, Child Care Aware estimated.

DailyFinance.com reported that in every region of the country except for the West, a family with two children in child care spends more for their kids to be looked after than they do on all housing costs combined.

The five most expensive states to have an infant in child care, as a percentage of media family income, are: New York, 15.9 percent; Minnesota, 15.6 percent; Oregon, 15.4 percent; Colorado, 15.2 percent; and Hawaii, 14.7 percent.

The five least expensive states, according to DailyFinance, were: Mississippi, 7.0 percent; Alabama, 7.6 percent; Louisiana, 7.7 percent; South Dakota, 8.2 percent; and South Carolina, 8.2 percent.

"When confronted with such costs — and endless waiting lists — many parents are faced with the difficult decision of whether to continue working or to take a few years off to care for their children themselves," DailyFinance reported.

Editor’s Note: Retired Americans Slammed by Obama’s Redistribution Plans

Related Stories:

Child Born in 2012 Seen Costing $241,080 to Raise to 18

Report: Child Care Costs More Than College and Rent in Some States

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