The Distributional Effects of the Tax Treatment of Child Care Expenses / William M. Gentry, Alison P. Hagy.

Format:

Book

Author/Creator:

Gentry, William M., author.

Hagy, Alison P., author.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w5088.

NBER working paper series no. w5088

Language:

English

Subjects (All):

Child care--Costs--United States.

Child care.

Income tax deductions for child care expenses.

Physical Description:

1 online resource: illustrations (black and white).

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1995.

Summary:

Tax relief for child care expenses, encompassing the Child Care Tax Credit and Dependent Care Assistance Plans, is the largest federal government program in the United States aimed at helping families with child care. We examine the distributional effects of these policies among families with children using both the National Child Care Survey and tax return data. Among families that use tax relief, the benefits average 1.24 percent of family income. Benefits as a percentage of income vary systematically over the income distribution. Despite being regressive at low income levels (mainly due to the credit being non-refundable), tax relief is progressively distributed over most of the income distribution with the ratio of benefits to income falling above the bottom quintile of the income distribution. The benefits of tax relief also vary among families with the same income depending on a family's structure and its labor market and child care choices.

Notes:

Print version record

April 1995.