Restore the child care tax credit
Roy Cooper
"I will use a portion of any future gains in state revenue to reinstate the childcare tax credit for working families."
Coop-O-Meter
Stalled
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The North Carolina General Assembly voted to override Gov. Roy Cooper's veto of the state budget, enacting their own spending plan. It covers the next two fiscal years of spending – through June 30, 2019.
When Cooper announced his veto, he mentioned three specific things the legislature could do to get him to agree to a compromise. One was to reinstate North Carolina's tax credit for child care expenses.
"For my signature on a budget they should eliminate the corporate tax cut, include the child care tax credits that were set out in my budget, and limit their income tax cut to those making less than $150,000 a year," Cooper said.
But legislators made no changes to the budget before overriding his veto.
The child care tax credit has been a priority for Cooper. In 2016, one study found, it cost North Carolina families an average of nearly $17,000 a year to have two kids in child care.
Previously, we had rated Cooper's promise to reinstate this tax credit as In The Works, since he had laid out a plan for setting aside $52 million a year for credits to make child care more affordable for North Carolina families.
However, the Republican-led General Assembly eliminated it as part of a 2013 tax overhaul, and lawmakers demonstrated this week that they have no intention of signing it back into law at this point in time.
We rate this promise Stalled.
North Carolina budget, 2017-2019
The News & Observer, June 28, 2017, "NC House overrides budget veto, making the spending plan law"
Child Care Aware in America, "Parents and the High Cost of Child Care: 2016"
NC Child, "The High Cost of Quality Child Care"
Child care can be incredibly expensive, often costing parents more than their rent or mortgage each month.
In North Carolina, one 2016 study found, it costs an average of $16,847 annually to put two kids through child care. That's more than the price of in-state college tuition for a year, and it's a third of what the typical household earns in a year ($47,830 as of 2015).
As part of his campaign last fall, Democratic Gov. Roy Cooper said he would reinstate a tax credit for child care that the state took away under his predecessor, Republican Gov. Pat McCrory.
"I will use a portion of any future gains in state revenue to reinstate the childcare tax credit for working families," Cooper said.
A bit of background: McCrory and the GOP-controlled legislature enacted sweeping changes to North Carolina's tax code (PolitiFact found in 2014 the changes mostly benefitted the wealthy).
They reduced the income tax rate for people and businesses, and raised the standard deduction. They paid for it by charging sales tax on more items and services, and by eliminating many tax credits and loopholes.
Among the now-defunct tax credits was one that people could claim for child care expenses.
Cooper made several promises that revolved around his criticism of those tax reforms, including a promise to reinstate film tax credits and a promise to raise education spending without raising taxes back up.
The standard deduction is how much of someone's income doesn't get taxed, if they don't itemize their deductions. In raising the standard deduction (e.g. from $11,600 to $17,500 for a married couple filing jointly), Republicans said they took care of the need for specialized tax credits.
Yet on this child care tax credit issue, Cooper said he would pursue it if the state's revenue increased. Well, next fiscal year the state projects it will have a revenue surplus of more than $550 million.
And Cooper has now proposed reinstating the child care tax credit – starting in the 2018 tax year. He estimated it would save taxpayers (and therefore cost the state) $52.5 million.
Here's how Cooper said it would work: "The credit would be equal to 50 percent of the federal child and dependent care credit for children under age 6, and 35 percent of the federal credit for older children and other eligible dependents."
Cooper still has to convince Republican lawmakers – many of them the same ones who did away with this tax credit in the first place – to reinstate it. That isn't a guarantee. But for now we rate this promise In The Works.
Child Care Aware in America, "Parents and the High Cost of Child Care: 2016"
NC Child, "The High Cost of Quality Child Care"
The News & Observer, Feb. 9, 2017, "NC has a budget surplus. Should it fund tax cuts or 'better schools and a stronger middle class'?"
PolitiFact, July 25, 2014, "Liberal PAC says Senate candidate Thom Tillis' tax plan will 'overwhelmingly benefit the wealthy'"