[Congressional Record Volume 143, Number 84 (Tuesday, June 17, 1997)]
[Senate]
[Page S5871]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HARKIN (for himself and Mrs. Murray):
  S. 926. A bill to amend the Internal Revenue Code of 1986 to expand 
the child and dependent care credit, and for other purposes; to the 
Committee on Finance.


          THE WORKING FAMILY CHILD CARE TAX RELIEF ACT OF 1997

  Mr. HARKIN. Mr. President, today, I rise to introduce the Working 
Family Child Care Tax Relief Act of 1977. This legislation is targeted 
to those families most in need of a tax break--working families with 
child or dependent adult care expenses. The need for child care 
continues to grow, 60 percent of women in the workforce have children 
under 6 years of age. Moreover, hard working families throughout Iowa 
and across America are struggling to meet the escalating costs of child 
care. A family with a preschool-age child spent an average of $15 more 
per week on child care in 1993 than in 1986. Currently, average child 
care costs for a working family in Iowa run about $3,000 to $6,000 per 
year.

  Today, there is a child care tax credit available for many working 
families--but that credit hasn't been increased since 1982--and it 
wasn't even adequate then. Inflation has reduced the value of the 
credit by about 60 percent since it was last adjusted in 1982. Under 
current law, families with $10,000 in adjusted gross income are 
eligible for a 30-percent credit on the first $2,400 in child care 
expenses for one child or $4,800 for two children. The credit phases 
down to 20 percent at $28,000 and all incomes above that level. Because 
the child care tax credit is not refundable, few families actually 
qualify for the full 30 percent credit under current law. Families with 
an income of less than $10,000 do not have a tax liability against 
which they can apply the credit.
  This legislation would expand the child care tax credit and make it 
available for more working families. The amount of child care expenses 
eligible for the credit would be increased to $4,000 for one child or 
other dependent and $8,000 for two or more dependents. For example, my 
proposal would provide a 30-percent refundable credit for working 
couples with an adjusted gross income of up to $50,000 on the first 
$8,000 in child care expenses for two or more children or other 
dependents. For families earning between $50,000 and $80,000, the 
credit gradually phases down to current level. Families earning more 
than $80,000 would be eligible for the same level of benefits they 
receive under current law.
  Although we must continue our efforts to reach a balanced budget, we 
must also realize that American families with child or dependent care 
expenses deserve a tax break. But I am not talking about doling out 
huge new tax breaks for those on top who don't need it. This 
legislation is targeted directly to families in the middle--they are 
not on welfare and they are not rich. They work hard, they care about 
their families and their jobs, and they deserve a break.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 926

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled.

     SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

       (a) Short Title.--This Act may be cited as the ``Working 
     Family Child Care Tax Relief Act of 1997''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.

     SEC. 2. EXPANSION OF CHILD AND DEPENDENT CARE CREDIT.

       (a) Increse in Credit.--Paragraph (2) of section 21(a) 
     (relating to credit for expenses for household and dependent 
     care services necessary for gainful employment) is amended to 
     read as follows:
       ``(2) Applicable percentage defined.--For purposes of 
     paragraph (1), the term `applicable percentage' means 30 
     percent reduced (but not below 20 percent) by 1 percentage 
     point for each $3,000 (or fraction thereof) by which the 
     taxpayer's adjusted gross income exceeds $50,000.''
       (b) Increase in Maximum Amount Creditable.--
       (1) In general.--Section 21(c) (relating to dollar limit on 
     amount creditable) is amended--
       (A) by striking ``$2,400'' in paragraph (1) and inserting 
     ``$4,000'', and
       (B) by striking ``$4,800'' in paragraph (2) and inserting 
     ``$8,000''.
       (2) Phaseout for taxpayers with adjusted gross income in 
     excess of $50,000.--
       (A) In general.--Section 21(c) is amended by adding at the 
     end the following new paragraph:
       ``(2) Limitation based on adjusted gross income.--If the 
     taxpayer's adjusted gross income for the taxable year exceeds 
     $50,000, the applicable dollar amount under paragraph (1) 
     shall be reduced as follows:
       ``(A) the $4,000 amount under paragraph (1)(A) shall be 
     reduced (but not below $2,400) by $53.33 for each $1,000 (or 
     fraction thereof) of such excess.
       ``(B) the $8,000 amount under paragraph (1)(B) shall be 
     reduced (but not below $4,800) by $106.66 for each $1,000 (or 
     fraction thereof) of such excess.''
       (2) Conforming amendments.--Section 21(c), as amended by 
     subsection 9(b), is amended--
       (A) by striking ``The amount'' and inserting:
       ``(1) In general.--The amount'',
       (B) by redesignating paragraphs (1) and (2) as 
     subparagraphs (A) and (B), respectively, and
       (C) by striking ``paragraph (1) or (2)'' and inserting 
     ``subparagraph (A) or (B)''.
       (c) Credit Made Refundable.--
       (1) In general.--Section 21 (relating to credit for 
     expenses for household and dependent care services), as 
     amended by this section, is transferred to subpart C of part 
     IV of subchapter A of chapter 1, inserted after section 35, 
     and redesignated as section 36.
       (2) Conforming amendments.--
       (A) Section 129 is amended--
       (i) by striking ``21(e)'' in subsection (a)(2)(C) and 
     inserting ``36(e)'',
       (ii) by striking ``21(d)(2)'' in subsection (b)(2) and 
     inserting ``36(d)(2)'', and
       (iii) by striking ``21(b)(2)'' in subsection (e)(1) and 
     inserting ``36(b)(2)''.
       (B) Section 213(e) is amended by striking ``section 21'' 
     and inserting ``section 36''.
       (3) Clerical amendments.--
       (A) The table of sections for subpart A of part IV of 
     subchapter A of chapter 1 is amended by striking the item 
     relating to section 21.
       (B) The table of sections for subpart C of part IV of 
     subchapter A of chapter 1 is amended by adding at the end the 
     following new item:

``Sec. 36. Expenses for household and dependent care services necessary 
              for gainful employment.''

       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1997.
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