Statements on Introduced Bills and Joint Resolutions - S 1253

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

By Ms. MURKOWSKI:

    S. 1253. A bill to amend the Internal Revenue Code of 1986 to provide a minimum credit of $200 per month for stay-at-home parents, to allow the dependent care credit to be taken against the minimum tax, and to allow a carryforward of any unused dependent care credit; to the Committee on Finance.

    Ms. MURKOWSKI. Mr. President, I have come to the floor today to introduce legislation that will help many young families in America meet the financial challenges associated with raising children. The legislation I am introducing attempts to alleviate some of the financial costs incurred by the more than one out three families when one of the parents decides to leave the work force to raise children at home.

    Current tax law recognizes that when both parents remain in the work force, they incur additional child care costs because, in order to keep their jobs, they have to pay for day care services. Current tax law provides a sliding scale tax credit that allows parents to claim a tax credit of up to 35 percent to offset as much as $3,000 of day care costs for one child, $6,000 for two or more children. The maximum $1,050 tax credit, $2,100 for two or more children, phase down as income rises. The minimum, 20 percent credit, applies to families with incomes above $43,000.

    I strongly support this dependent care tax credit because it makes it easier for husbands and wives to maintain their careers and provide for their families. However, there are many families that have made the decision that one of the parents will give up a job in order to raise their children. In fact, this is a growing trend. In 2001, 37.7 percent of families had one parent at home raising the child; that's up from 35.3 percent in 1995. And the stay-at-home parent is, overwhelmingly, the mother. Barely 3.6 percent of stay-at-home parents are husbands.

    When a working woman makes the decision to interrupt her career to raise her child, the family incurs an immediate financial penalty. And more often than not, the career interruption may damage the woman's future earnings potential, what some have referred to as the "Mommy Track."

    The immediate loss of income when a parent leaves the workforce significantly changes the family's lifestyle. For example, consider a childless couple where the husband earns $35,000 and the wife earns $27,000. After paying Federal income and payroll taxes, the family retains slightly more than $50,000 in disposable income. If the family has a child, and both parents continue their careers, after taxes they still will keep more than $49,000 of their earnings, even if they incur child care expenses of $3,000. However, in this example, if the father gives up his job, the family's disposable income drops by nearly 40 percent to less than $32,000. Put another way, the family's monthly income drops from $4,100 to $2,700. That's a difficult adjustment for any family, especially one that has to incur the additional costs of a newborn.

    I respect the parents who choose to maintain their careers while raising a family and the parents who make the financial sacrifice to give up their careers to raise a family. But I believe the tax code should treat both equally.

    My legislation attempts to alleviate the current inequity in the code by giving stay-at-home moms or dads a $200 a month tax credit. This credit would be indexed for inflation. The credit would apply until the child reaches the age of 6. While this credit could never make up the financial loss that families face when one of the parents stops working, it will provide some important financial relief to these families. In the example I cited earlier, if the father did not work for a full year, the $2,400 tax credit would completely eliminate the family's $1,500 Federal tax bill, giving the family that much more to spend on their living expenses.

    In addition, under this proposal, any unused tax credits could be carried forward indefinitely. Many parents who leave the work force to raise their children return to work when their kids enter school. By allowing the carry forward of unused credits, the parent who re-enters the work force will be able to keep more of his or her earnings to make up for the financial sacrifice made when choosing to stay home with the family. I think it is only fair that society recognize the financial sacrifice these parents have made.

    Congress recently acted to eliminate the marriage penalty. We should now act to eliminate the penalty imposed on families when a parent leaves the workforce to raise a child at home. It makes sense for our families and it is good tax policy.

    I ask unanimous consent that the text of the legislation be printed in the RECORD.