"The Little Engine That Hasn't: The Poor Performance of Employer Tax Credits for Child Care"
Christina Smith FitzPatrick, Nancy Duff Campbell
The National Women's Law Center, November 2002.
The National Women’s Law Center reports in “The Little Engine that Hasn’t” that employer tax credits for child care, popular among policy makers, are rarely utilized and do little to promote employer-sponsored child care programs. These credits allow companies to offset some of their child care costs with a reduction in their state tax liability. Currently, 28 states have such a program, but few employers are taking advantage of it and the National Women’s Law center believes that many of those that have used the credit would have provided their workers with child care in any case.
The study examines 20 states that provide employer tax credits for child care. In 16 of these states, five or fewer companies claimed the credit, including five states that did not boast a single claimant. The NWLC argues that these tax credits do not provide enough of a financial incentive relative to the cost of providing child care to encourage employers to change their policies. In addition, they question whether tax credits could ever influence employers’ behavior because many companies have very little state tax liability.
