$400/week? Sounds a bit steep. Ten years ago I was paying $100/week in a "top 20 metropolitan area" and that was for a rather high end service in the 2nd wealthiest suburb in the region.
Much like college tuition increases, a government tax break merely means the suppliers will all increase prices to adsorb the new supply of money. Its basic supply and demand, you have a supply of more money, so we'll demand it. A govt tax break has no impact on the standard of living of the population, its a give away for the industry it applies to.
Also DCRA is a complicated tax mess where its incompatible with some other social engineering child tax credit scheme, causing all manner of annoyance and confusion. That's all I remember of that detail, at least 5 to 10 years ago at the fed level you could put pre-tax income into a DCRA OR not pay income tax on some small subset of childcare expenses but obviously you couldn't double dip and apply both credits to untax your untaxed income although the paperwork made it easy enough to accidentally try.
I think your numbers might be outdated, we're paying ~1200/mo in a fairly rural area outside of the baltimore area (not exactly known for wealth) for the cheapest "professional" daycare for about 4h a day, as the child is in kindergarden and only needs 3-4 hours a day of extra help. I'm told that the upper end daycare (across the street) is more like 4-5k/mo in the same semi-rural area.
There is a difference between a tax break and recognizing something as an expense. The difference is, roughly, the difference between trying to incentivize certain behavior and trying to properly define income (as distinguished from revenue).
E.g. if you're in a business, you get to deduct the cost of employee salaries. The portion of your revenue that goes to employee salaries isn't a benefit to you in any way except as a necessary part of your business. If you didn't have the business, you wouldn't have that expense. Allowing the deduction isn't a "tax break" but is rather necessary in order to properly define "net income" as distinct from "revenue."
Day care is similar. It's a necessary expense of going to work. The portion of your salary spent on daycare isn't a benefit to you in anyway except as a necessary condition of going to work. If you didn't go to work, you wouldn't have that expense.
$100/week. That's $2.50 an hour. An appropriate ratio of caregiver to babies is 3:1. So $7.50 an hour per caregiver. Assume overhead of 33%. That's being generous: I'm going to want to choose a location with a good sized yard so my kids can play outside a lot, and yards cost money. So by my math, that works out to $5 an hour for a caregiver. WTF?
Sure, the ratios can get quite a bit better as the babies get older, but you're still talking about rates that seem more appropriate for the 3rd world or the 19th century with a servant underclass than about rates that are appropriate for the professionals that many early childhood educators are.
Ten years ago, 4:1 for infants and "just before kindergarden" ages it was something like 10:1. The local schools are about 20:1 so that's not terribly out of line. Also it is true it was about twice as expensive for infants compared to almost grade school kids. So near $200 for infants but was only about $100 for the last checks I wrote for the kids.
Also if you think early childhood educators make more than minimum wage, well, you must not know any.
This[1] seems about right for the ECE people I know, none of whom are making minimum wage. Daycare workers without any certifications make minimum wage, certified workers make about 50% more and the heads make about double minimum wage.
Comments
The child care tax credit covers about 2 months of daycare in a major metro area.
$400/week? Sounds a bit steep. Ten years ago I was paying $100/week in a "top 20 metropolitan area" and that was for a rather high end service in the 2nd wealthiest suburb in the region.
Much like college tuition increases, a government tax break merely means the suppliers will all increase prices to adsorb the new supply of money. Its basic supply and demand, you have a supply of more money, so we'll demand it. A govt tax break has no impact on the standard of living of the population, its a give away for the industry it applies to.
Also DCRA is a complicated tax mess where its incompatible with some other social engineering child tax credit scheme, causing all manner of annoyance and confusion. That's all I remember of that detail, at least 5 to 10 years ago at the fed level you could put pre-tax income into a DCRA OR not pay income tax on some small subset of childcare expenses but obviously you couldn't double dip and apply both credits to untax your untaxed income although the paperwork made it easy enough to accidentally try.
I think your numbers might be outdated, we're paying ~1200/mo in a fairly rural area outside of the baltimore area (not exactly known for wealth) for the cheapest "professional" daycare for about 4h a day, as the child is in kindergarden and only needs 3-4 hours a day of extra help. I'm told that the upper end daycare (across the street) is more like 4-5k/mo in the same semi-rural area.
There is a difference between a tax break and recognizing something as an expense. The difference is, roughly, the difference between trying to incentivize certain behavior and trying to properly define income (as distinguished from revenue).
E.g. if you're in a business, you get to deduct the cost of employee salaries. The portion of your revenue that goes to employee salaries isn't a benefit to you in any way except as a necessary part of your business. If you didn't have the business, you wouldn't have that expense. Allowing the deduction isn't a "tax break" but is rather necessary in order to properly define "net income" as distinct from "revenue."
Day care is similar. It's a necessary expense of going to work. The portion of your salary spent on daycare isn't a benefit to you in anyway except as a necessary condition of going to work. If you didn't go to work, you wouldn't have that expense.
$100/week. That's $2.50 an hour. An appropriate ratio of caregiver to babies is 3:1. So $7.50 an hour per caregiver. Assume overhead of 33%. That's being generous: I'm going to want to choose a location with a good sized yard so my kids can play outside a lot, and yards cost money. So by my math, that works out to $5 an hour for a caregiver. WTF?
Sure, the ratios can get quite a bit better as the babies get older, but you're still talking about rates that seem more appropriate for the 3rd world or the 19th century with a servant underclass than about rates that are appropriate for the professionals that many early childhood educators are.
Ten years ago, 4:1 for infants and "just before kindergarden" ages it was something like 10:1. The local schools are about 20:1 so that's not terribly out of line. Also it is true it was about twice as expensive for infants compared to almost grade school kids. So near $200 for infants but was only about $100 for the last checks I wrote for the kids.
Also if you think early childhood educators make more than minimum wage, well, you must not know any.
This[1] seems about right for the ECE people I know, none of whom are making minimum wage. Daycare workers without any certifications make minimum wage, certified workers make about 50% more and the heads make about double minimum wage.
1: http://www.livingin-canada.com/salaries-for-early-childhood-...
The minimum wage in Canada is about $10, +/- 50 cents depending on jurisdiction.
I have no idea where he's paying $100/week. We're paying $1,300 per month in Wilmington, DE, which is not exactly a high cost of living place.