In state budget proposal, upper-middle class gets biggest boost from child care tax credit

With middle-class parents facing potentially overwhelming child care costs, the state Legislature is considering Gov. Andrew Cuomo’s proposed expansion of the child care tax credit.

Speaking Jan. 11 in Albany, Cuomo said the credit would help 200,000 families who “desperately” needed assistance. “The cost of child care for middle-class families, the average cost for two children has gone to $25,000 a year, believe it or not,” he said. “You wonder how people make it.”

The enhanced middle class child care tax credit – the third of 37 proposals that were part of Cuomo’s 2017 legislative agenda – is part of a plan to address child care costs that are among the highest in country, reaching an average annual cost of more than $14,000, according to the Economic Policy Institute.

The proposal, an expansion of the New York state child and dependent care tax credit, is expected to cost the state $42 million. There’s a need for working parents to find a place to send their kids, since more than 65 percent of kids younger than six years old have two working parents, according to Cuomo’s office.

The tax credit, which dates back to the late 1970s, covers child care for children younger than 13 years old, as well as spouses or dependents who are physically or mentally unable to take care of themselves. Nearly 520,000 families received about $189 million in credits in 2014, Cuomo’s office said.

The credit would increase for families earning from $50,000 to $150,000, with the average credit rising from $169 to $376. But the increase would be felt more dramatically for families on the upper bounds of the threshold. For example, for families earning between $50,000 and $55,000, the average state credit would increase by $87 to $605; those earning between $100,000 and $150,000 would see an average of $222 increase to $333. “Families making less than $50,000 already receive a considerable benefit,” the governor’s press release noted.

Assemblywoman Ellen Jaffee, who in January was named as chairwoman of the Committee on Children and Families, told City & State the proposal was a good step, but that it needed to go hand-in-hand with more money for the child care sector and subsidies for low-income families.

“I’m pleased the governor is seeing this as an issue,” she said. “Certainly middle class families are struggling on paying that as well. But we have low-income families – thousands and thousands – who have not been getting subsidies, and then you have the workers for whom the wages are so low. I think it’s an issue we need to address across the board, and it’s not simple.”

Jaffee said she was planning to host a roundtable and work on legislation, including potentially reintroducing a bill requiring the state Office of Children and Family Services to evaluate the full costs of providing day care statewide.

About 83 percent of families who are eligible for a subsidy are turned away because local towns and counties aren’t able to provide the amount of assistance needed, according to the Schuyler Center for Analysis and Advocacy, which said the governor’s proposal “falls short” of putting day care within reach of middle-class families.

Cuomo’s proposal, aimed squarely at middle-class families, could be expected to be popular across the state, but previous efforts to expand the tax credit have stalled. And the governor is still trying to make peace with legislators smarting over Cuomo’s lack of support for a legislative pay raise.

A Senate Republican spokesman didn’t respond to a request to comment on the proposal’s chances.

A 2013 proposal by Brooklyn Sen. Simcha Felder, backed by then-City Council Speaker Christine Quinn, would have extended the credits to any households earning up to $170,000. A spokesman for Felder declined to speak about the governor’s proposal.

This year, lawmakers allied with the Independent Democratic Conference, a group of eight Democrats who caucus with the Republicans, backed a bill that would increase the tax credit by 50 percent, though similar versions of the legislation have stalled in recent years. The state’s credit hasn’t been expanded since 1999, according to the IDC.

“Parents who are unable to afford licensed day care providers are sometimes forced to choose between placing children with less reliable options, leaving them home alone, or worst case scenario; quitting a job,” said the bill’s sponsor, David Carlucci, in a statement. “The governor’s support for expanding the child care tax credit that helps make raising a family in Rockland or Westchester more affordable is very welcomed news.”

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