Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, April 1, 1990 TAG: 9004010123
SECTION: NATIONAL/INTERNATIONAL PAGE: A/6 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
To provide funds for the $27 billion measure, which primarily benefits lower-income families, Democratic sponsors put limits on the dependent-care tax credit that is popular with many professionals and two-income households.
More than 500,000 taxpayers took the dependent-care credit in 1986, the last year for which the Internal Revenue Service could provide figures. Congressional tax estimates figure roughly 900,000 would be affected in 1991.
Families of all income levels are eligible for the credit designed to offset a portion of child-care expenses: 20 percent to 30 percent, depending on income, of eligible expenses up to $4,800.
But the House bill would reduce the credit for families with combined incomes over $70,000 a year and end it entirely at $90,000.
Families at that level are regarded as upper income and affluent, and they had few defenders in the House debate.
Some lawmakers did have reservations about eliminating the deduction. They said the issue is more complex than merely soaking the rich or targeting the yuppies.
"In many states, $70,000 translates into a family headed by two police officers or two teachers," said Rep. Pat Schroeder, D-Colo., who voted for the bill anyway.
The heart of the child-care assistance bill, which passed Thursday after months of wrangling, is an expansion of the earned-income tax credit, which goes to working families with children and incomes up to about $20,000.
The House bill, which is under a threat of veto by President Bush, is headed for a conference committee to resolve differences with the Senate's version.
The bill the Senate passed last year does not reduce the dependent-care credit. It is less costly than the House version and provides smaller tax credits to the poor.
The House bill includes money to establish a system of day care based in the public schools that would be available to all families for a price.
The revenue recovered by cutting the credit is relatively small. The Congressional Budget Office put the amount at $1.5 billion over five years. Sponsors came up with another $13 billion by extending the telephone excise tax, but even with that the bill would add to the federal deficit.
Women's groups have been watching closely as Congress fashions the bill. With 64 percent of women working outside the home, child care is a business expense just as necessary as a salesman's car, said Nancy Duff Campbell, managing partner of the National Women's Law Center, a lobbying group.
"If you're going to take away work-related benefits, that's fine, but do it across the board, not just for dependents and child care - do it for business lunches and luxury trips," she said. "What we object to is singling out this benefit that's so important to women."
The credit also affects the expenses of special care for other dependents, such as an infirm parent or disabled spouse or older child. And, for people above the cutoff level, employer-offered child-care programs at free or reduced cost will become a taxable benefit.
by CNB