Bush Unveils Tax-Credit Plan for Child Care

Times Staff Writer

President Bush, declaring that “we must put choices in the hands of parents and not in the hands of government,” unveiled a proposal Wednesday that would give low-income parents a tax credit of up to $1,000 a year to help meet child-care costs.

Under the President’s plan, no restrictions would be placed on child-care arrangements. Thus, eligible parents would be allowed to send their youngsters to organized day-care centers, leave them in the care of relatives or friends or care for them at home if the parents work there. The money could be spent as the working parents see fit, and would not have to be devoted to the actual expense of day care.

“Increasing the range of child care options available to parents, particularly those who head families of modest means, will benefit the nation’s children, their parents, and the country as a whole,” Bush said in a written statement.

Costs to Rise


The White House estimated that the President’s proposal would cost the federal Treasury $187 million in 1990 and would reach $2.5 billion within three years as eligibility is expanded and more people take part.

It is one of several competing federal recommendations for helping low-income families meet child-care costs--an issue in the 1988 election campaign.

Bush’s plan would reach an estimated 2.5 million families at first, expanding to 3.5 million when fully implemented. It would be limited to parents of children younger than 4.

It was quickly dispatched to Congress to make clear the President’s preferences on the same day that the Senate Labor and Human Resources Committee approved a $2.5-billion program of direct subsidies to working parents.

Under the President’s plan, eligible parents would receive a tax credit worth 14% of their income for each child under 4. The maximum credit parents could claim would be $1,000.

Those with annual adjusted gross incomes of between $7,143 and $8,000 would receive the full $1,000 credit per child, based on 14% of their income. Those with lesser incomes would receive smaller credits, amounting to 14% of their income.

A tax credit is applied to an individual’s tax liability each year, reducing the amount of tax that is paid. Under the Bush plan, those liable for no taxes would receive the value of their 14% tax credit in a payment from the government.

The cash value of the credit would be reduced beginning at an income level of $8,000, and would be phased out entirely at $13,000. Under the Bush plan, a scale would lower credits by 20 cents for each $1 of income above $8,000. Thus, someone with a $10,000 income would be entitled to a tax credit of $600.


The income ceiling for those eligible for benefits would rise gradually in the next few years. By 1994, those with incomes up to $20,000 would be eligible for the credits.

In unveiling the President’s proposal, the White House also announced that Bush was seeking an increase of $250 million in funding for the Head Start education program, which provides special preschool education for children of low-income families.

White House Press Secretary Marlin Fitzwater said that the additional money, on top of a current appropriation of $1.2 billion, would allow 95,000 more children to participate in the program, which now has an enrollment of 452,000.

Bush’s child-care program makes no effort to regulate the quality of child-care arrangements.


“This is simply a different thrust,” Fitzwater said. “It’s simply a different issue.

“We believe that parents have the best idea of how to take care of their kids, that they can handle this money,” he said.

Every Dollar Counts

Asked whether a $1,000 credit--approximately $20 a week--would significantly help low-income working parents, Fitzwater said: “If you’re only making $8,000, every dollar makes a difference.”


The fact that Bush made public his proposal as the Senate committee was approving a plan advanced by the Democrats indicated strong momentum for some form of child-care assistance during the current session of Congress.

“It’s not a question of whether or not we’re going to do something on child care this year, but the direction it’s going to take,” said Sen. Dan Coats (R-Ind.).

The measure advanced by the Senate committee is sponsored by Sen. Christopher J. Dodd (D-Conn.). It would provide benefits to families whose income does not exceed the median income in the state in which they live. The national median income for a family of four is $32,777. It would be available to families with children up to age 15. The individual family benefit would vary widely, depending on state administration of the program.

Unlike the Bush proposal, the Dodd measure would set standards for day-care providers.


At a news conference, Dodd said that he is “opposed to any suggestion” that the President’s proposal “is a substitute somehow for a meaningful child-care bill.”