Tax Notes Talk Can Tax Policy Address the Childcare Crisis?
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May 1, 2026 Lauren Shores Pelikan, a law professor and tax expert (JD, CPA) proposing the Child Care Service Provider Exclusion. She explains a tax-based approach to boost childcare supply and wages. Topics include why tax incentives can change worker behavior, the role of private equity, and how boosting supply differs from boosting demand.
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Flip Tax Benefits To Support Childcare Workers
- Federal child care tax incentives currently favor parents, but this fails to address a supply-side crisis.
- Lauren Shores Pelikan proposes flipping the benefit to child care workers to expand supply and stabilize the market.
Childcare Is Labor Intensive And Low Margin
- The U.S. child care sector is largely for-profit but operates on razor-thin margins, with labor consuming 70–80% of budgets.
- Independent centers often post under 1% profit while teachers earn roughly half of kindergarten teacher pay.
Average Childcare Costs Exceed Affordability Benchmarks
- National average child care cost is about $13,000 (2024), which exceeds HHS's 7%-of-income guideline for many families.
- $13,000 equals ~10% of median married-parent income and ~35% of a single parent's median income.