Could Tax Reform Under President Trump Actually Help Working Moms?

Illustration: Jim Cooke / GMG, Photos: Getty
Illustration: Jim Cooke / GMG, Photos: Getty

Today, Donald Trump is scheduled to give a “big announcement” revealing his tax reform plan. While it is unlikely to reveal many new details, his press conference will serve as the opening shot for months of tax reform negotiations on Capitol Hill.


And as Republican lawmakers try to reach a consensus on tax reform within a sharply divided party, they will take cues from an unusual source—the President’s eldest daughter, Ivanka Trump, who made her unprecedented position as “First Daughter” official just in time to wield formal influence over her top legislative priority: childcare reform.

Ivanka, a 34-year-old mother of three and a powerful business executive, has spoken publicly about the the importance of affordable childcare. In her July convention speech, she promised that her father would “focus on making quality child care affordable and accessible for all” if elected President. In a September op-ed in The Wall Street Journal, she followed up on those remarks, arguing that the “lack of quality, affordable child care is one of the biggest challenges facing American parents.”

Ivanka is right: while stay-at-home parents provided most childcare in the 1950s, today both parents work in the majority of families with children. Economic trends over the past several decades have made it increasingly unrealistic for families to rely on a single income. Over the same time period, however, the cost of childcare has risen dramatically—climbing by more than 70 percent between 1985 and 2011—while wages have remained stagnant. In the last decade alone, childcare costs rose twice as fast as the median income of families with children.

In his 2015 State of the Union address, President Barack Obama called on Congress to “stop treating childcare as a side issue, or as a women’s issue, and treat it like the national economic priority that it is for all of us.” While Obama is correct that childcare is a national problem reaching a crisis point, it is also—and should be recognized as—a women’s issue. In the United States today, mothers spend roughly twice as much time as fathers do on childcare, even when both parents work full time. Analyzing these trends in her 2015 book Unfinished Business, Anne-Marie Slaughter makes a persuasive argument that gender equality therefore requires enacting new policies to ensure that “the expense and headache of childcare and eldercare don’t sink women and their families.”

Evidence suggests that the staggering cost of childcare is doing just that. Working mothers pay steep penalties for the childcare responsibilities that still fall disproportionately on their shoulders. Motherhood is now a greater predictor of wage inequality than gender is—while women between the ages of 25 and 35 earn 93 percent of their male contemporaries, that figure decreases significantly when they become mothers.

Even more troublingly, while the number of women entering the workforce grew significantly between the 1960s and early 2000s, this trend has reversed itself in recent years. With more women opting out of the workforce, economists like Francine D. Blau, an economics professor at Cornell University, have doubted whether “further increases in women’s participation can be had without more reallocation of household work.”


The US Census Bureau has linked the decline in women’s participation in the workforce to the fact that “for mothers who have more than one child under 5, the cost of daycare might be higher than she could support unless she has fairly high earnings.” While true, this vastly understates the problem. The annual cost of providing care for an infant now exceeds the cost of college tuition in most states, while providing care for more than one child costs more than annual median rent in all 50 states. It is no wonder that many women fortunate enough to have the option of providing their own childcare are increasingly choosing to do so.

But for many families—including the more than 20 million children in the United States who live with single mothers—this is simply not an option. For them, the childcare situation is near catastrophic. Roughly half of single mothers earn less than $25,000 per year, and the cost of childcare now exceeds the annual income of a worker earning the minimum wage.


Throughout history, lawmakers have used the Internal Revenue Code to provide relief to working families facing economic hardships. In the 1980s, for example, Ronald Reagan called his proposed expansion of the Earned Income Tax Credit “the best anti-poverty, the best pro-family, and the best job creation measure to come out of Congress.” Through the tax code, lawmakers incentivize certain behaviors—like home buying—by allowing taxpayers to deduct certain expenses from taxable income—through a mortgage interest deduction, for example—or by creating tax credits, which function as dollar-for-dollar reductions in the amount of tax owed.

While the IRS allows taxpayers to deduct all “ordinary and necessary” business expenses, caregiving costs are not currently eligible for this deduction. Today’s rule comes from a 1939 case, Smith v. Commissioner, (which has not been revisited in the intervening 80 years) in which the court—despite sardonically acknowledging “[w]e are told that the working wife is a new phenomenon”—reasoned that a business deduction for childcare would be inappropriate given the wife’s role “as custodian of the home and protector of its children.”


Instead, Congress came up with the “Dependent Care Tax Credit” (DCTC), which provides a tax credit for caregiving expenses incurred “to enable the taxpayer to be gainfully employed.” Unfortunately, however, the DCTC does little to help most working families due to its complex formula and its non-refundable nature.

Take the example of a married couple with one child, in which each spouse earns $20,000 per year: this family is eligible to benefit from a credit of $675—just a fraction of the average annual cost of care for one child, which is approximately $10,000. (A business deduction, by contrast, would give them approximately double the benefit, at $1,500).


Alternatively, consider a different married couple with one child, in which one spouse earns $100,000 per year, while the other earns $35,000 per year: even though they earn almost $100,000 more per year than the first family, they are eligible for a nearly equal credit of $600 from the DCTC.

Paradoxically, the situation is even worse for a single parent with one child who earns $20,000 per year: she will gain only $275 from the DCTC. This is because she only owes the federal government $275 in taxes, after factoring other credits and deductions, along with her “head of household” filing status. If the DCTC were a refundable credit—like the earned income tax credit championed by Reagan—she would receive an additional $700 in the form of a government check.


Ivanka’s childcare proposal addresses many of these problems by creating a new tax deduction for caregiving expenses, along with tax-free flexible spending accounts with matching contributions for low-income families. Perhaps most remarkably, her plan also requires employers to provide six weeks of paid maternity leave; a change that would end the United States’ embarrassing distinction as the only developed country in the world that currently fails to provide such a guarantee to its workers.

As with most tax reform proposals, the plan has both benefits and drawbacks. One positive feature is that, unlike most deductions (including those for business expenses), taxpayers who otherwise would prefer to use the standard deduction can still deduct childcare expenses. This is particularly important for lower-income families, the majority of which benefit from the standard deduction.


The proposed deduction also replaces the DCTC’s arbitrary fixed dollar limits with caps equal to the average annual cost of childcare in the taxpayer’s state, which range from roughly $4,000 in Mississippi to $17,000 in Washington, D.C. Tying the value of the subsidy to the average cost in the state’s market is a feature that proponents of the current Affordable Care Act tax credit lauded as crucial for low-income workers in the context of the recent healthcare debate.

A major drawback of Trump’s plan is that it overwhelmingly benefits wealthier families over lower-income ones; the Tax Policy Center concluded that 70 percent of the plan’s benefits would go to families earning $100,000 or more. Moreover, the paid maternity leave proposal appears to apply only to mothers, and not to fathers—a feature that Hillary Clinton’s campaign policy adviser Maya Harris rightly condemned as coming from “a ‘Mad Men’ era” in which “only women are taking care of infants.” The suggested six-week leave period also falls well below those provided by other western countries, and is still two weeks short of the recommended leave period for the 20 percent of mothers who give birth by C-section every year.


Though it is clear that Ivanka is driving the proposal, another issue is that the reform would be credited to an unabashedly misogynistic president, one who has called breastfeeding “disgusting” and bragged about never having changed a diaper. Trump’s views on working women are perhaps best exemplified by comments he made in an interview with ABC News in 1994, in which he began with the caveat, “I don’t want to sound too much like a chauvinist,” and went on to complain, “when I come home and dinner’s not ready, I go through the roof,” concluding that, “putting a wife to work is a very dangerous thing.”

A few weeks ago, Bloomberg reported that Ivanka met with lawmakers on Capitol Hill in February to ask them to incorporate her childcare plan into the broader tax reform effort. If she is successful, this will leave the millions of women who marched in protest of Trump’s inauguration in January with a painful choice: do we forego the opportunity to solve a childcare crisis that is, as Anne-Marie Slaughter puts it, “the taproot” that “gives rise to distortion and discrimination” against women across America? Or do we advocate for a desperately needed reform, knowing that its success would embolden and perhaps legitimize a reckless and sexist President?


Those in a position to influence the tax reform debate in Washington owe it to the millions of struggling working mothers to fairly (and rigorously, given the administration’s fondness for “alternative facts”) evaluate any such proposal on its merits. If we believe that the policy—viewed in conjunction with other proposed changes to the tax code—will ultimately provide necessary relief to working mothers, we should find a way to advocate for its success while making clear that Donald Trump is still no champion of working women. As Hillary Clinton said in her now famous 1995 speech in Beijing to the U.N. Conference of Women—just one year after Trump’s deplorable ABC News interview—now is a time when “we must move beyond rhetoric” and focus on advocating for the “women everywhere who simply don’t have time to do everything they are called upon to do each and every day.”

Ally Coll Steele is a graduate of Harvard Law School, and a former Democratic Hill staffer in both the House and the Senate. She worked on the Clinton campaign in the legal department during the 2016 election.


JujyMonkey: unstable genius

“Could Tax Reform Under President Trump Actually Help Working Moms?”

Short answer: No.

Longer Answer: Fuck no.