Child Care Tax Credits Part 4 – Supporting Michigan Businesses
August 21, 2014 – This is the fourth and final blog in a series about opportunities to improve the quality of Michigan’s child care system through tax credits. This week, I’m going to blog more in-depth about Louisiana’s tax credits for businesses and what a similar model could do for Michigan.
In Louisiana, businesses are eligible for a tax credit in several ways – one for contributions to Child Care Resource and Referral Agencies, and another specifically for business who support employees’ child care needs. I’m going to talk a bit more about the business credit that helps employees. Employers can support their employees’ child care needs in three ways:
- By making payments directly to a child care facility for employees’ children;
- By purchasing child care slots provided or reserved for employees’ children; or
- By constructing, renovating, expanding, or repairing a child care center, purchasing equipment, or maintaining or operating a center.
Businesses can receive a tax credit as a percentage of their child care related investments based on the quality rating of the facility that they are investing in. Because high quality child care costs are so expensive, shifting some of this financial burden off low-income working families will provide a significant benefit to both employees and employers. For businesses, this type of tax credit will have significant benefits for them as it relates to their day-to-day operations and ultimate success. With more women in the workforce than ever before and low-income families reliant on all adults in the household working to make ends meet, the needs of working families must be addressed to ensure that businesses can thrive. We know that inconsistent child care results in more missed work days by parents, which is particularly problematic for low-income parents who struggle to afford consistent child care. Offering on-site child care or a child care benefit to a high quality program will ensure that staff have reliable child care that will allow them to be more productive at work. And, offering a child care benefit will allow businesses to attract and retain quality staff. Additionally, a tax credit for donations made for infrastructure improvements of already existing child care programs provides an enticing incentive for businesses to invest in those quality improvement efforts.
For families, this business tax credit will increase access to higher quality, reliable child care that supports their children’s learning and development. High quality child care can ensure that young children are building the foundational base they need to succeed in school, and help school-aged children stay academically engaged and on-track. In short, a business tax credit will lead to more productive employees whose children are in high quality child care settings, which will ensure that businesses thrive today and that the workforce of tomorrow will be prepared for Michigan’s global economy.
If high quality child care is something you, your family or your neighbors struggle to access, please consider talking to candidates running for public office about this issue.
Learn more about opportunities through child are tax credits in our Issues for Michigan’s Children publication.