TY  - JOUR
AU  - Gentry,William M.
AU  - Hagy,Alison P.
TI  - The Distributional Effects of the Tax Treatment of Child Care Expenses
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5088
PY  - 1995
Y2  - April 1995
UR  - http://www.nber.org/papers/w5088
L1  - http://www.nber.org/papers/w5088.pdf
N1  - Author contact info:
William M. Gentry
Department of Economics
Williams College
Morey House
Williamstown, MA  01267
Tel: 413-597-4257
Fax:  413-597-4045
E-Mail: William.M.Gentry@williams.edu
M1  - published as William M. Gentry, Alison P. Hagy. "The Distributional Effects of the Tax Treatment of Child Care Expenses," in Martin Feldstein and James Poterba, editors, "Empirical Foundations of Household Taxation" University of Chicago Press (1996)

AB  - Tax relief for child care expenses, encompassing the Child Care Tax Credit and Dependent Care Assistance Plans, is the largest federal government program in the United States aimed at helping families with child care.  We examine the distributional effects of these policies among families with children using both the National Child Care Survey and tax return data.  Among families that use tax relief, the benefits average 1.24 percent of family income.  Benefits as a percentage of income vary systematically over the income distribution.  Despite being regressive at low income levels (mainly due to the credit being non-refundable), tax relief is progressively distributed over most of the income distribution with the ratio of benefits to income falling above the bottom quintile of the income distribution. The benefits of tax relief also vary among families with the same income depending on a family's structure and its labor market and child care choices.
ER  -