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Federal Tax Benefits for Child Care: Progressivity Over Time, EGTRRA, and the Alternative Minimum Tax

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  • Eiler John R

    () (Office of Tax Analysis, US Department of the Treasury)

  • Hrung Warren B.

    () (Office of Tax Analysis, US Department of the Treasury)

Abstract

This paper examines the progressivity of tax benefits for child care over time. We find that the Child and Dependent Care Tax Credit (CDCTC) became more progressive between 1989 and 1998. However, total tax benefits for child care, which include the employer exclusion for child care, were less progressive than the CDCTC alone and became less progressive over time. In simple simulations using 1998 data as the base, we find that the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) increases the progressivity of the CDCTC and total tax benefits for child care.

Suggested Citation

  • Eiler John R & Hrung Warren B., 2003. "Federal Tax Benefits for Child Care: Progressivity Over Time, EGTRRA, and the Alternative Minimum Tax," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 3(1), pages 1-14, November.
  • Handle: RePEc:bpj:bejeap:v:topics.3:y:2003:i:1:n:16
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