Financing Child Care in the United States - Ewing Marion Kauffman ...

More documents

Recommendations

Info

GENERATING PUBLIC REVENUE TAX CREDITS, DEDUCTIONS AND EXEMPTIONS contribution tax credit, which was equal to 25 percent of the value of a contribution to promote child care in an enterprise zone, was claimed by about 1,300 taxpayers and resulted in a tax expenditure of $720,000 in 1998, reflecting contributions of at least $2.88 million made for this purpose. SERVICES FUNDED “Promoting child care” is broadly defined and includes donating money, real estate or property for the establishment or operation of a child care facility program in Colorado; donating money to establish a grant or loan program for Colorado parents requiring financial assistance for child care; donating money for the training of child care providers in Colorado; pooling moneys of several businesses and donating such moneys for the establishment of a child care facility in Colorado; and donating money, services or equipment for the establishment of a child care resource and referral service in Colorado. Any contribution to a for–profit business is eligible for the credit only if it is directly used by the business for acquisition or improvement of facilities, equipment or services, including the improvement of staff salaries, staff training or the quality of child care. No credit is available to a taxpayer who receives something of value in exchange for the contribution. According to explanatory documents created by the Colorado Department of Revenue’s Taxpayer Service Division, however, “this will not restrict a company from contributing to a child care center and claiming a credit based on that donation if the employees of the company receive a benefit in the form of discounted child care,” since “one of the prime goals of this tax credit is to encourage employers to contribute to child care for their employees.” Nevertheless, the credit is not limited to employers, and can be claimed by any taxpayer making a qualifying contribution. HOW FUNDS DISTRIBUTED Taxpayers may make contributions directly to the selected child care program or facility. If a contribution is made to an intermediary organization, the donee organization must issue the taxpayer a statement setting out the portion of the contribution that was applied to purposes other than the promotion of child care, and no credit is available for this portion of the contribution. The taxpayer claims the credit when filing the year’s income tax return. POPULATION SERVED Contributions may be made to any child care facility or program in Colorado (with the special requirements for contributions to for–profit businesses noted above), by any Colorado taxpayer, regardless of corporate status. STRATEGIC CONSIDERATIONS • A strength of this funding approach is that it builds on the voluntary sector. Thus, it is not perceived as a government program and allows taxpayers to choose where they want funds to go. Some policy–makers are concerned, however, that allowing taxpayers to choose where tax funds go undermines efficient policy choices in allocating resources. One way to respond to these concerns would be to craft a credit that includes incentives for funding certain particularly valuable or necessary services, e.g., allowing a larger credit when taxpayers contribute funds to high–quality child care programs. • Credits may be more successful at encouraging contributions to or investment in child care if eligibility for these credits is not limited to employers alone, even when one purpose of the credit is to promote employer–supported child care. A broad credit encourages businesses that are unwilling to create a new child care employee benefits program to assist state and community child care operations, resulting in greater private investment in child care. A broad credit also provides an incentive to individuals to support child care. In 1998, when Colorado’s credit still could be claimed only for contributions to promote child care in enterprise zones, about 1,300 taxpayers claimed the credit. In contrast, in most states with traditional employer child care credits for which information is available, fewer than 20 taxpayers claim the credit in any given tax year. • Conversely, broad credits may result in greater revenue loss to a state, precisely because they are available to more taxpayers. • In crafting state tax credits, attention should be paid to their broader interaction with the state and federal tax code. For instance, many taxpayers who claim contribution–based credits, like that available in Colorado, also will be eligible for a charitable deduction on their federal taxes. This in turn can further lower the taxpayer’s state taxes, since federal taxable income is used as the basis for many state tax calculations. Similarly, in some states with more traditional employer child care credits, an employer can claim a credit for its expenses in providing child care to employees as well as deduct those expenses. Such interactions can further increase the tax benefit of contributing to child care. OTHER SITES WITH SIMILAR STRATEGIES In 1999, Maine adopted a “quality child care investment credit,” effective tax year 2001. See the Start ME Right profile on page 78. 41
CONTACT Nancy Duff Campbell National Women’s Law Center 11 Dupont Circle Washington, DC 20036 Phone (202) 588 5180 Fax (202) 588 5185 Colorado Department of Revenue 1375 Sherman St., Room 404 Denver, CO 80261 Phone (303) 866 3091 Fax (303) 866 2400 TAX INCREMENT FINANCE DISTRICTS (MAINE) DESCRIPTION To encourage business and economic development in blighted areas, Maine authorized municipalities to set up development districts known as “Tax Increment Financing Districts” (TIFs). A municipality can retain all or part of the additional portion of all real and personal property taxes assessed by a municipality in the TIF for the purpose of financing a development program, sheltering part of the property value of a new development project so long as the revenue generated from the sheltered property value is used for a development program approved by the state. The Maine TIF permits child care as an allowable project cost. Municipalities gain tax benefits during the term of the TIF. The taxes assessed on the captured value within the TIF (i.e. the property value increase) are exempted during the term of the district from Maine municipal revenue sharing and public education formulas, and from county taxes. TIF ensures that a municipality will not experience a reduction in public education and revenue sharing funds from the state, or an increase in county taxes during the term that it commits the TIF revenues to a development program. WHEN ESTABLISHED The TIF program was established in Maine in 1985. A 1999 amendment to the statute added child care costs. To date no TIFs have contained child care as a project cost. ANNUAL AMOUNT Funds are not allocated to a TIF. Municipal legislative bodies designate a TIF and can use the sheltered funds for child care costs associated with developing the area (e.g., the cost of child care for new employees in the TIF). SERVICES FUNDED The statute does not define “child care.” The municipality would determine what range of child care services, e.g., family day care, child care centers, and school–age programs to allow and whether a limit on eligibility of families, e.g., family income, should be set. HOW FUNDS DISTRIBUTED A municipality must use the revenue generated by designating a TIF for authorized development programs, which can include the costs of child care needed within the TIF. 42
Page 1 and 2: FINANCING CHILD CARE IN THE UNITED
Page 3 and 4: FINANCING CHILD CARE IN THE UNITED
Page 5 and 6: ABOUT THE GRANTEE PHILADELPHIA CITI
Page 7 and 8: :02 ALLOCATING PUBLIC REVENUES 54 O
Page 9 and 10: HOW TO USE THIS CATALOG This catalo
Page 11 and 12: This revised, expanded edition of F
Page 13 and 14: DIFFERENT EXPECTATIONS The expectat
Page 15 and 16: 03 LONG-TERM THINKING Successful st
Page 17: LEVERAGING Matching and leveraging
Page 20 and 21: TAXES Income taxes are the major so
Page 22 and 23: EMPLOYER INCOME TAXES Twenty-five s
Page 24 and 25: LOCAL PROPERTY TAXES CHILDREN’S S
Page 26 and 27: GENERATING PUBLIC REVENUE LOCAL PRO
Page 32 and 33: GENERATING PUBLIC REVENUE SALES AND
Page 38 and 39: TAX CREDITS, DEDUCTIONS AND EXEMPTI
Page 40 and 41: GENERATING PUBLIC REVENUE TAX CREDI
Page 54 and 55: GENERATING PUBLIC REVENUE FEES OTHE
Page 56 and 57: GENERATING PUBLIC REVENUE FEES •
Page 58 and 59: GENERATING PUBLIC REVENUE LOTTERIES
Page 60: GENERATING PUBLIC REVENUE LOTTERIES
Page 64 and 65: SOCIAL AND HUMAN SERVICES A number
Page 66 and 67: EDUCATION Education is a powerful r
Page 68 and 69: SOCIAL AND HUMAN SERVICES RHODE ISL
Page 70 and 71: ALLOCATING PUBLIC REVENUES SOCIAL A
Page 84 and 85: HEALTH EARLY CHILDHOOD EDUCATION LI
Page 86 and 87: ALLOCATING PUBLIC REVENUES HEALTH P
Page 88 and 89: ALLOCATING PUBLIC REVENUES HEALTH H
Page 90 and 91: EDUCATION STATE INVESTMENTS IN PREK
Page 92 and 93: ALLOCATING PUBLIC REVENUES EDUCATIO
Page 100 and 101:
ALLOCATING PUBLIC REVENUES EDUCATIO
Page 102 and 103:
Page 104 and 105:
Page 106 and 107:
ALLOCATING PUBLIC REVENUES HIGHER E
Page 108 and 109:
ALLOCATING PUBLIC REVENUES HIGHER E
Page 110 and 111:
ALLOCATING PUBLIC REVENUES CRIME PR
Page 112 and 113:
LOCAL GOVERNMENT BEACONS (NEW YORK,
Page 114 and 115:
ALLOCATING PUBLIC REVENUES LOCAL GO
Page 116 and 117:
Page 118 and 119:
Page 120 and 121:
111
Page 122 and 123:
EMPLOYERS Employers increasingly re
Page 124 and 125:
EMPLOYERS AT&T FAMILY CARE DEVELOPM
Page 126 and 127:
FINANCING CHILD CARE IN THE PRIVATE
Page 128 and 129:
Page 130 and 131:
PHILANTHROPY ALLEGHENY COUNTY EARLY
Page 132 and 133:
Page 134 and 135:
Page 136 and 137:
Page 138 and 139:
Page 140 and 141:
Page 142 and 143:
Page 144 and 145:
Page 146 and 147:
137
Page 148 and 149:
When businesses in the private sect
Page 150 and 151:
PUBLIC-PRIVATE PARTNERSHIPS EMPLOYE
Page 152 and 153:
PUBLIC-PRIVATE PARTNERSHIPS EMPLOYE
Page 154 and 155:
PUBLIC-PRIVATE PARTNERSHIPS COMMUNI
Page 156 and 157:
Page 158 and 159:
Page 160 and 161:
Page 162 and 163:
Page 164 and 165:
CAPITAL INVESTMENT PARTNERSHIPS CHI
Page 166 and 167:
PUBLIC-PRIVATE PARTNERSHIPS CAPITAL
Page 168 and 169:
Page 170 and 171:
Page 172 and 173:
Page 174 and 175:
165
Page 176 and 177:
LOOKING TO THE FUTURE TAX POLICY Th
Page 178 and 179:
LOOKING TO THE FUTURE THE HOME MORT
Page 180 and 181:
LOOKING TO THE FUTURE HIGHER EDUCAT
Page 183 and 184:
APPENDIX 174
Page 185 and 186:
WHAT YOU OWN Property taxes on real
Page 187 and 188:
INDEX 178
Page 189 and 190:
Child Care Scholarship Fund of the
Page 191 and 192:
lotteries and gaming, 14 Neighborho
Page 193 and 194:
Area, Kansas and Missouri), 133—1
Page 195:
income tax provisions for child car
show all

Financing Child Care in the United States - Ewing Marion Kauffman ...

Create successful ePaper yourself

Delete template?

Save as template?