Rep. Kelly Introduces Bipartisan Bill to Help Working Families Afford Quality Child Care

May 24, 2017 Issues: Tax Reform

Tax relief legislation endorsed by major child advocacy groups

WASHINGTON — U.S. Representative Mike Kelly (R-PA) – a member of the House Ways and Means Committee – issued the following statement today after introducing the Working Families Relief Act (H.R. 2618) in the House of Representatives. The legislation would increase the maximum amount that employees can set aside for, or employers can provide to, the Dependent Care Assistance Program (DCAP), a flexible spending account which can be used to pay for childcare on a pre-tax basis. It would raise the cap from $5,000 to $10,500 and index it for inflation. It would also provide tax credits to employers who match DCAP contributions in order to encourage them to offer the benefit. The bill is co-sponsored by Rep. Linda Sánchez (D-CA) and was previously introduced by both members in May 2016 during the last congress.

Statement by Rep. Kelly (R-PA):

“Early education and a child’s healthy development go hand in hand. Giving kids the right foundation at a young age means giving them a fair opportunity to succeed in life. Unfortunately, far too many working families struggle to cover costs for quality care. This bipartisan bill will help parents overcome that difficulty by expanding and modernizing DCAP accounts, which currently help more than 1.3 million families pay for early learning programs and childcare every year. As Congress works closer toward achieving pro-growth tax reform to rebuild our economy, this bill is about making sure our tax code is firmly on the side of our nation’s most precious asset – our children – and the hardworking parents who love and support them.”

Statement by Rep. Sánchez (D-CA):

“As a working mom myself, I understand that every working parent wants to be able to do it all. However, we often have to make sacrifices in both our personal lives and our careers just to keep up. I know that even a little help can make a world of difference for a hard working family. The Working Families Relief Act seeks to make childcare a little more affordable for working families. I look forward to working with my friend Rep. Mike Kelly to pass this important legislation on behalf of hardworking Americans.”

Statement by Mark Shriver, President of Save the Children Action Network:

“Many parents know that without high-quality learning programs, their children could fall behind and never catch up. Families want to provide their children with this kind of quality care; however, for many it’s simply unaffordable. Expanding the Dependent Care Assistance Program so more working families can participate will make child care costs more affordable and help parents ensure their children have a strong start in life. I want to thank Representatives Mike Kelly and Linda Sanchez for leading on the Working Families Relief Act in the House.”

Statement by David Kass, President of Council for a Strong America:

“We know from the research that high-quality early learning environments can have a positive impact on our children's educational attainment, behavior, and health.  For many working families, high-quality care is out of reach.  We commend Representatives Mike Kelly and Linda Sanchez for their bipartisan legislation, the Working Families Relief Act, which provides a much-needed update to the Dependent Care Assistance Program. This legislation is an important step forward in making childcare more affordable for all families.”

Excerpt of joint op-ed by Rep. Kelly and Mr. Shriver in the Erie Times-News and at the Huffington Post:

In America today, fewer than one in three children have a full-time, stay-at-home parent. Almost one-quarter of children under the age of 5 are in organized child care arrangements. For these families, the average cost of center-based child care is at least $12,000 per year, according to Child Care Aware.

High-quality early learning and care is one of the most effective ways to help kids escape poverty and ensure equal opportunity for all. It leads to higher graduation and employment rates, and it helps build a more prepared workforce. Though we come from opposite sides of the political aisle, we agree that helping families afford child care or early education programs should be a bipartisan goal and is a smart investment in the future of America.

While the federal tax code has some provisions that help families afford early child care, more can be done to assist low-income families with little to no income tax liability, for whom existing tax credits are of little help. Some of these parents are left with a debilitating choice: having to either leave the workforce, or place their children in low-quality child care.

Earlier this year, the Early Childhood Education Action Tank, a diverse coalition of children’s advocacy groups, businesses and financial institutions convened by Save the Children Action Network, released a menu of options for tax reform that would help address the two greatest barriers to early childhood education: cost and lack of access to quality programs.

One of the Action Tank’s recommendations is expanding tax credits and deductions for early childhood education. This includes reforming the Dependent Care Assistance Program (DCAP), an employer-sponsored flexible spending program for up to $2,500 annually ($5,000 for married couples) to employees who pay for dependent care. In this program, employees are allowed to deduct dependent care expenses from their paycheck on a pretax basis, helping parents save money while ensuring their children are able to make the most out of their early years.

This bipartisan legislation [the Working Families Relief Act] would make DCAP stronger by increasing the maximum amount employees can exclude from income to $10,500, allowing a tax credit for small employer DCAP startup costs, and providing a tax credit to employers who match employees’ contributions by up to $1,000. These improvements would make the program more beneficial to families, while also incentivizing more employers to offer access.

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