The old saw about nothing being certain but death and taxes happens to be true. Another certainty is that tax policy impacts women differently from men—and not in a positive way. It’s been that way since taxes were first collected, and if President Trump follows through on his self-proclaimed “innovative” pronouncements about the changes he’ll make, it could get worse.
These days virtually every family needs child care, and like it or not, women are still bearing most of the burden. Not to mention that women are by far the majority of single parents. To ease the burden, the U.S. has long had a child care tax credit. Simply put, it’s a credit, up to $6,000 depending on your income, that comes off the bottom line after income taxes are calculated.
The downside is that the credit only applies to workers earning enough to pay income taxes in the first place, which excludes many low-income families. Women’s groups have long advocated that it should also apply to payroll taxes (Medicare, Social Security), which every worker pays regardless of income. This way, workers at the bottom—who need it most—can also benefit from the credit.
During the campaign President Trump also smugly proposed to “allow parents to fully deduct the average cost of child care” from income taxes. Changing child care to a deductible instead of a credit as it is now hits middle-income workers hardest. The present Child and Dependent Care Credit comes off your tax bill whether you itemize or not. Changing it to a deduction means if you don’t itemize, you don’t get the deduction.
And besides, what does “average cost of child care” actually mean? Child care costs vary from state to state, arrangement to arrangement, and income to income. So presumably a mother such as Ivanka Trump—her father says she will be put in charge of child care reform—could deduct the cost of a high-priced, live-in nanny. But those with a child in family day care or cared for by grandparents could deduct a comparative pittance. Or nothing at all.
Working mothers of young children aren’t the only ones punished by our current tax system. Stay-at-home moms also come in for their unfair share of tax treatment. They get a big fat zero in Social Security accounts for years spent caring for kids, unlike almost all countries in the European Union other advanced nations which grant caregiver credits. President Trump has said he won’t change Social Security, but this is one change that’s badly needed, and would mean fewer women ending up in poverty in their old age.
Our new chief executive does have one proposal that will help a tiny slice of the female population. His plan to slash the top income tax rate from 39.6 percent to 33 percent would definitely benefit upper-income women who earn more than $413,350 per year. But what of their lower-paid sisters, like the majority of minimum-wage workers who happen to be adult women? No meat on that bone. These women already make so little they qualify for the Earned Income Tax Credit—and often have to rely on Medicaid and Food Stamps to get by. Since they don’t pay income tax, these cuts are meaningless to them. Trump’s plan ignores this inconvenient truth for women, still getting 78 cents on the dollar for full-time work when compared to men.
If our new president really wanted to overhaul the tax code in a way that would help women, he’d advocate for increasing taxes on the rich and corporations, and revoking favorable tax treatment for organizations like the Catholic Church that blatantly discriminate against women. We could use the savings to allow child care credits against payroll taxes, grant caregiver credits in Social Security, and give a little tax relief to employers offering paid family leave in the bargain. Now those are some truly “innovative” tax ideas.
