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A Pain-Free Way to Subsidize Early-Childhood Education?

August 17, 2017

Should some of the tax deductions that we get for our charitable contributions instead go to subsidize early-childhood education?

CCIG’s Joaquin Escobar.

The Brookings Institution thinks so, despite the fact that charitable contributions (and the deductions that encourage them) help fund its very operations.

It’s an idea that might find traction if the current Republican-controlled Congress has a chance to turn its attention to tax reform.

There’s no doubt that many American families need and could use help in paying for early-childhood education.

Brookings notes that both parents work in 56 percent of married families with children under six. In other words, childcare is a must-have for those families.

Affording childcare, however, can be an insurmountable challenge for many.

Related: Where We Rank in Early-Childhood Education

The U.S. Department of Health and Human Services has said that affordable childcare should not exceed 7 percent of family income. Childcare often costs much more than that. One estimate pegs the average weekly cost of full-time daycare at $196 per child, or about $10,000 per year. A low-income, single parent earning 50 percent of the national average wage would have to spend 52 percent of their income to afford to place their child in a center.

The consequences of all this, Brookings noted, are, well, consequential.

Among them is lost productivity because parents are forced to miss work to handle gaps in childcare or to care for a sick child. There’s also the problem of lost wages and reduced retirement benefits for parents who have to drop out of the labor market to provide at-home care for their children.

The good news, Brookings said, is that there is broad public support for more government spending on early childhood education – as long as that spending does not result in another unfunded entitlement that exacerbates the deficit.

And that’s where its charitable contribution idea comes in.

According to Brookings’ calculations, we need $42 billion to pay for early-childhood education. That money would come in part from shifting $26 billion from current federal spending on childcare and early childhood programs and pulling the other $16 billion from the charitable contribution deduction. Doing would still leave $39 billion on the table to continue the charitable contribution.

How would such a program work?

Brookings suggests that, based on their prior years’ tax returns, parents would receive subsidies that would be deposited in a federal savings account in their child’s name.

Is this the right or best solution? We’ll leave that to the policy experts. But you have to applaud the level of consideration being given to one of our more serious problems with an idea that neither requires raising taxes nor increasing deficit spending.

By the way, this isn’t merely about doing the right thing for our children.

As the conservative American Enterprise Institute noted recently – in a point made by countless others for decades – American business depends on a strong workforce to compete and succeed globally.

Yet “fewer than half of low-income 5-year-olds enter school ready to learn, and some are up to two years behind their peers,” AEI said in its report. “So, if we are going to compete successfully in the global marketplace, we must face a common sense reality: Instead of trying to close achievement gaps after children have entered school, it’s far more efficient to prevent those gaps from emerging in the first place.”

An early-childcare education center can be a very good place to do just that.

Joaquin Escobar, an Insurance Advisor at CCIG, handles the risk management and insurance needs of commercial childcare and school accounts. Reach him at 720-212-2054 or

CCIG is a Denver-area insurance brokerage with the full-service capabilities of a national brokerage. We do more than make sure you have the right policy. We also help you manage your long-term cost of risk with our risk and claims management expertise and a commitment to service excellence.

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