Huston: What’s Wrong With Conservative Thinking on Child Care

September 16, 2016

by Tom Huston

A description of Donald Trump’s child-care plan in the Weekly Standard is a perfect example of why I believe so much of what passes for conservative thinking these days is totally irrelevant to the real world.

Trump’s tax deduction for child-care costs would be available to a taxpayer with taxable income of up to $250,000 for single filers and $500,000 for a joint return. You don’t have to be a rocket scientist to understand that if you have taxable income not exceeding $18,550 for which the tax rate is 10 percent the “benefit” of the deduction is less than if you have taxable income of $500,000 for which the top marginal rate is 39.6 percent. Indeed, the deduction may be worth up to four times more to a married couple earning a half-million bucks a year compared to a married couple with a stay-at-home mom and a dad who works at a Walmart distribution center.

Trump’s plan attempts to deal with this inequality by providing for a minimum child care benefit of $1,200 a year in the form of a refundable tax credit. This is equivalent to a tax deduction of $3,000 for taxpayers in the top-rate bracket. The minimum guaranteed benefit for the working poor is referred to by conservative critics as a “tax transfer payment” while the rich couple’s deduction is regarded as an “economy-growing tax cut.” It is such thinking that has made so much of contemporary conservative policy talk incoherent to the working class.

Is the threshold issue not tax deduction versus refundable tax credit or whether there is a legitimate role for the federal government in helping workers or would-be workers who can’t afford decent day care for their children?

Many limited-government conservatives will instinctively argue that there is no such legitimate role, however real the need. Many of these same conservatives will, on the other hand, argue that there is a legitimate role for the Import-Export Bank to subsidize loans to Boeing and GE, or for the Agriculture Department to subsidize crop insurance premiums for farmers, or for young taxpayers to subsidize the Social Security benefits paid to seniors.

Beyond this threshold issue is the question of what is the most cost effective and efficient way to deal with the problem. There are a broad range of possible answers if you assume it is a legitimate question. Ivanka Trump is a Democrat who would be campaigning for Hillary if her father weren’t the Republican nominee. Her understanding of the child-care issue is based on the experience of high-salaried professional women who believe they are entitled to a taxpayer subsidy. This is a view for which I have little sympathy.

For many less fortunate mothers the cost of child care is a real problem that impacts them not on the margin of their high family income but at the core of their limited family budget. For these women I have a great deal of sympathy.

Tom Charles Huston, A.B., J.D., an adjunct scholar of the Indiana Policy Review and an Indianapolis developer, is a former associate counsel to the president of the United States.


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