Doing his part to help make America kinder and gentler, Sen. Orrin Hatch, R-Utah, introduced a bill Thursday calling for the type of assistance for child care promoted by President Bush during his campaign.
Hatch's proposed Family Earned Income Tax Credit Act would give tax breaks to low- and moderate-income people who use child care and even to those families where one parent stays home with the children.Hatch introduced similar legislation previously. But the chances for passage are much better this time partly because of Bush's campaigning and partly because Hatch recently struck a compromise with Democrats over their version of child care.
Hatch and Sen. Chris Dodd, D-Conn., agreed to mutually support Hatch's tax- credit bill and Dodd's "Act for Better Child Care," which sets up some government-funded child-care centers. The senators said each other's bill is an essential part of the overall child-care solution.
The two bills are expected to be joined later - even though they were once viewed as one-or-the-other options.
Hatch's tax-credit program would cost between $2.4 billion and $2.7 billion per year after it is phased in. Hatch said, "There is no question that the price tag is high, but the benefits are broad based."
Current tax credits do not give breaks to families where one parent stays home and would give families with at least one child in child care a credit of 14 percent of their income they earn up to $6,521.
At that maximum level, a family would receive a credit of $875. As a family's income increases beyond that point, the credit decreases by a 10 percent rate until it totally disappears when the income reaches $19,400.
Hatch's bill would give those with one child at home or in child care a 14 per cent break up to a $7,143 income level - bringing a maximum credit of $1,000. As income increases beyond that point, the credit decreases at a rate of 10 percent and disappears when income reaches $19,340.
Hatch's bill also gives additional tax breaks for families with additional young children.
A family with two children under age 6 would receive a 21 percent credit, equal to $1,500 at its maximum level. It would phase out at a 9.8 percent rate and end when income reaches $23,500.
A family with three or more children under age 6 would receive a 28 percent credit - bringing a $2,000 maximum credit. It would phase out at a 9.8 percent rate and disappear when income reaches $28,500.
Hatch has said advantages of his bill include that it allows financial help for those who use churches or relatives to help children, which are not helped through programs to set up federally funded care centers.
Hatch said his program would "provide substantive financial help for families all across America who are struggling to make ends meet."