Raising children in the United States is expensive, and child-care costs are many families’ biggest single expense. Full-time care at an organized daycare facility even costs more than tuition at a public university in many states.
Policymakers ought to consider reforms that will help ease the financial burden on families and make child care more affordable. However, as they do so, they should focus on supporting parents and leave the question of what kind of child care they use to them. Directly subsidizing daycare facilities or providing tax breaks solely for those families that use organized daycare facilities unfairly favors some families over others, and creates an incentive for more families to use daycare rather than family or other informal ch ildcare arrangements.
Currently, only about one quarter of children under age five are in daycare facilities. Many families—including many with modest incomes—make big sacrifices to have a family member at home when their children are young because they think it’s best. These families deserve financial relief too.
Policymakers can help by consolidating existing tax credits and government spending on children and returning that money to families through an expanded child tax credit. Relief could be targeted to help those with younger children and lower incomes. Such tax relief would help all parents better afford whatever child-care option works best for their families.