Panel OKs Wider Child-Care Tax Credit

The House Ways and Means Committee Wednesday approved a sweeping child-care plan that would provide roughly $5 billion a year in assistance, primarily by expanding a refundable tax credit for poor, working families.

The plan, approved on a 26-10 vote, contains a number of similarities to President Bush’s child-care proposal. Unlike the Administration plan, however, its benefits would not be limited to families with preschool-age children. It also would add about $400 million a year to help the states support child-care facilities.

It differs more sharply from a Senate bill supported largely by Democrats and approved last month. A separate House committee is also considering another, competing bill, but the House Democratic leadership appeared to be lining up behind the Ways and Means version.

Bush had threatened to veto any measure that would subsidize child-care facilities, but Administration officials waffled on their position during the committee’s closed debate on the bill, aides said. Although a Treasury official at the session opposed federal grants to child-care providers, he did not object to the overall measure.

Meanwhile, the committee was nearing a vote on whether the capital gains tax rate should be lowered, with both the White House and the House Democratic leadership engaging in behind-the-scenes lobbying.

President Bush, according to lawmakers, began making personal appeals for support of a bill to reduce taxes on profits from investments, while House Speaker Thomas S. Foley (D-Wash.) urged the committee to preserve the 1986 tax law revision, which ended the special rate for capital gains.

Under the child-care measure approved by the Ways and Means Committee--which is in the process of drafting a tax bill aimed at raising $5.3 billion for next year’s budget--poor, working parents could receive a tax credit based on the number of children in the family.

Under current law, poor families--regardless of the number of children--are eligible for a tax credit that is expected to reach a maximum of $1,002 in 1991. The proposed new approach would increase the amount of the earned income tax credit to as much as $1,790 for a family with three or more children, with an additional credit of up to $430 available to families with at least one child younger than 6.

The bill also would expand the system of making block grants to states to help pay for child-care services. It would add $400 million a year to the $2.7 billion now being spent.

The overall cost of the child-care package over a four-year period, from 1991 to 1994, was put at $16 billion.