Dayton wants child care tax credit extended to all families

Gov. Mark Dayton wants Minnesota to increase its spending on the child care tax credit by making it available to all families, not just those with low incomes.

If state lawmakers go along with the governor's proposal, rather than spending about $15 million a year on child care tax credits the state will spend almost $73.6 million a year.

The tax credit could be a financial boost to many parents, given the high cost of daycare — which is too high for parents like Brea Lonze, of Eagan, Minn., to afford. About a year ago her husband started working nights so he could be at home taking care of their four children during the day.

"As a middle income family with four children we couldn't afford to have them go to daycare," she said. "It was easier for us to look at a different work/life routine right now until they got to the age to be in school. And we don't make a high income, but we make a good one, and it was still way too expensive for us."

In Minnesota, 36,000 families with incomes below $39,000 qualify for a state tax credit that helps pay for child care. If Dayton has his way, the credit would be available to every family with day care expenses, an estimated 170,000 Minnesota households.

"This should be something that everybody could support," Dayton said. "What the exact amount is, what the phase out level of income is, is something that can be negotiated, but I don't think anybody who has family members or friends or constituents who have young children can dispute the financial pressures and how steeply they've risen."

The changes Dayton wants would align Minnesota's child care tax credit with the federal government's. Depending on income and the number of children in a family, the total annual credit would range from $600 to $2,100.

State Revenue commissioner Myron Frans said the move is part of a broader effort to align Minnesota's tax code to the federal tax code.

"One of the really strong goals of matching state tax code to federal tax code is simplicity and making things simpler for taxpayers to file," Frans said. "And in many cases such as these deductions and credits we're talking about, it also provides middle class, in this case middle class, lower income class tax cuts."

Republicans likely are willing to support the effort to make the child care tax credit available to every Minnesota family, Deputy House Minority Leader Jenifer Loon said.

"I'm for more tax relief for Minnesotans, with the surplus that we have in the budget I think it's absolutely appropriate," said Loon, R-Eden Prairie. "I think we're forcing Minnesotans to pay more in taxes than they need to and I think helping working families with young children with their tax burden is absolutely appropriate."

And help with day care bills might be needed more in Minnesota than most other states. According to the organization Child Care Aware, Minnesota ranks as the third least affordable daycare state.

Lonze said she's all for expanding the credit even though it would not directly affect her because she and her husband care for their four children.

"I absolutely do think it's a great idea, because it's expensive to have children in daycare," she said. "It's more than a mortgage and a car payment for us."