Englewood, NJ –U.S. Rep. Bill Pascrell, Jr. (D-NJ-09), New Jersey’s only member of the tax-writing Ways and Means Committee, was joined by Bergen County parents at the Bergen Family Center in Englewood to announce legislation he introduced to make child care more affordable for working class families. The bill, H.R. 964, Working Parent Support Act of 2015, would create a Child Care Tax Deduction more valuable to middle income families.

“The exorbitant cost of child care in New Jersey is becoming an increased financial burden on families, particularly in Bergen County,” said Rep. Pascrell.  “The fact is that our current Child and Dependent Care Tax Credit is woefully inadequate to meet the needs of middle class families.

“By letting parents pay for childcare out of their pre-tax income, my legislation will more than double the amount of support families currently receive. Working together, I’m sure we can enact these pro-work policies that provide the support our families need and that makes our economy and society stronger,” concluded Pascrell.

The current child care credit doesn’t help middle income families enough. A family in the 15% tax bracket earning $17,850 to $72,500 annually  and spending $7,436 on child care only receives $532 from the current child care and dependent tax credit. If an “above the line” deduction were available, it would allow middle income families to deduct their childcare expenses and continue to claim the standard deduction.

The Working Family Support Act of 2015 creates a new, above the line deduction for qualified child care expenses, allowing families to deduct up to $7,000 in expenses per child each year, capped at $14,000/year. Families would be able to claim this deduction whether they itemize or claim the standard deduction.

Using the previous example, the same family would be able to write off $1,115 from their tax liability, which is more than double what they get from the current tax credit.

“We see examples each and every day of parents forced to make difficult decisions regarding the cost of child care,” stated Phyllis A. Strohmeyer, Director of Bergen County Office for Children. “Quality, affordable child care is something that every family deserves, and I applaud Congressman Pascrell’s efforts to help make this a reality for parents in Bergen County and beyond.”

Currently, middle class families are hit hard by the way child care expenses are treated by the tax code. The federal child and dependent-care credit, which is supposed to help with these expenses, is means tested—it decreases as household income increases—making it less valuable for the middle-class.

Additionally, a lower-paid spouse's earnings are taxed at a higher marginal rate because of the other spouse's earnings. These factors, combined with the high cost of childcare, particularly in our region, create economic disincentives for many spouses to return to the workforce.

Earlier this year, President Obama announced a new $80 billion proposal intended to help more families afford child care.  The President’s plan would dramatically expand the Child Care and Development Block Grant, a federal program that provides grants to states for childcare assistance programs to help low- and middle-income families

A recent report issued by the New Jersey Association of Child Care Resource and Referral Agencies cites Bergen County as having the highest child care costs in New Jersey.  Reaching more than $13,000 annually for an infant, the average child care cost in Bergen County exceed the costs for a commuter to attend Rutgers’ Newark campus.

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