Ivanka Trump pushes $500 billion child care subsidy plan: Who would benefit?

The plan, which is similar to one President Trump proposed during his campaign, would make child-care expenses tax deductible for individuals earning less than $250,000. But critics argue that low-income families would not be able to take advantage of the benefit.

First Look

First daughter Ivanka Trump is asking Congress to rein in child-care expenses – but at a hefty price.

According to a report from Bloomberg News, Ms. Trump met with members of Congress in the White House’s Roosevelt Room last week to discuss her plans for a child care tax benefit which could cost as much as $500 billion over 10 years. Ms. Trump urged Republican lawmakers to consider her plan when writing a tax overhaul, a project that President Trump says is coming soon. 

Ms. Trump's proposal is very similar to the plan proposed by Mr. Trump in September: Child-care expenses for individuals earning less than $250,000 annually (or couples earning less than $500,000 annually) would be deductible from income taxes. Critics of the plan have argued that the threshold is too high and could amount to a subsidy for wealthy Americans at the expense of low-income families who do not make enough money to qualify for tax deductions.

According to a 2015 report from the Tax Policy Center, a nonpartisan research group, 45 percent of Americans don’t make enough money each year to pay federal income taxes in the first place. Mr. Trump’s plan last fall included a higher earned income tax credit for low-income families who don’t qualify for a deduction, essentially giving these families a tax credit.

“Ivanka Trump’s involvement in tax negotiations between the White House and congressional Republicans is a signal of her influence with her father despite having no formal role in his administration,” writes Bloomberg.

Although federal nepotism laws enacted after former President John F. Kennedy appointed his brother to attorney general prohibit Trump from hiring any family member to an agency or office he oversees, Ms. Trump's opinions have long been reported as valuable to the president. 

On the issue of child care, however, Ms. Trump has conveyed a particular passion for reform as well as noteworthy sway with the president. During her speech at the July 2016 Republican convention, Ms. Trump promised that her father would “focus on making quality child care affordable and accessible for all” as president.

And later in September while on the campaign trail in Pennsylvania, Mr. Trump announced a set of policy proposals to make child-care expenses tax deductible for families earning less than $500,000 a year – with Ms. Trump by his side. 

Former Democratic presidential candidate Hillary Clinton criticized Mr. Trump’s plan for child-care reform, arguing that his plan did not do enough to help low-income families. But the fact that candidates of both parties broached the issue attests to impact of rising child-care costs. A report last month from the US Department of Agriculture found that raising a child from birth in 2015 through the age of 17 costs $233,610 – a 3 percent increase from the year before.

“Little focus has been put on how best to alleviate enormous financial burdens child care places on low-income and middle-income families,” said Ms. Trump at the September rally before introducing her father. 

But opponents say Ms. Trump's plan fails to do just that. 

“[T]he child-care deduction Ivanka and her father are putting forward represents a droplet of progress in how GOP leaders discuss the choices women make about work and family,” writes Slate, the left-leaning news outlet. 

Alan Cole, an economist with the Tax Foundation, a nonpartisan research group, has similar concerns.

“The child care proposal is generous and broad; almost everyone with young children will get some benefit from it,” Mr. Cole told Bloomberg. “However, the largest benefits will go to relatively affluent dual-income families using paid child care.”