KOHL'S CHILD CARE TAX CREDIT FOR EMPLOYERS SIGNED INTO LAW

Proposal offers incentive for business to address shortage of affordable, quality child care

WASHINGTON, DC – U.S. Senator Herb Kohl's legislation to create a tax credit for employers that provide on- or near-site child care centers for their employees was signed into law today by President George Bush. Kohl's proposal is designed to address the shortage of licensed child care, the high costs of child care for working families, and the importance of early childhood education by encouraging employers to help increase the supply of affordable, quality child care. Kohl's bipartisan tax credit provision was incorporated into the comprehensive tax cut bill approved by Congress last month and signed by the President today.

"The supply of affordable, quality child care in our country is not keeping up with the demand -- many working families simply cannot find licensed care for their young children. This shortage is not just inconvenient, it is a missed opportunity. We know that good early childhood programs can improve children's chances of long-term success in school and decrease their odds of involvement with crime and violence. And employers who offer child care attract more highly qualified applicants, greater loyalty and less absenteeism. Clearly, we all have a stake in increasing the supply of quality child care for working families. This child care tax credit is a simple first step," Kohl said.

Kohl's proposal will make a 25% tax credit available for employer expenses related to child care activities such as:

The acquisition, expansion, or repair of an on- or near-site day care center, after hours care facility, or sick child

facility. This credit would also be available for a consortium of businesses that joined together to create a child care center

Direct company subsidization of the operating costs of a child care facility

A company's reservation for their employees of child care slots in a licensed child care facility

Company expenditures on training and continuing education for child care workers

The credit would be capped at $150,000 per year. Safeguards in the legislation ensure that the companies receive the tax credits for capital expenditures that go toward facilities that stay in operation for several years and that primarily serve their employees. The credit would be 10% for the cost of a company's contract with a child care resource and referral service.

"Not only do employees love the security and contact with their children, companies find it to be an excellent recruiting tool. Employee retention is improved and job satisfaction skyrockets. I have visited business-sponsored child care facilities across Wisconsin and have seen how much satisfaction the situation can bring employers and employees alike. This law makes us all partners in ensuring we have enough quality child care for working families and productive employees," Kohl said.

The Children's Defense Fund estimates that 13 million preschoolers, including 6 million infants and toddlers, are in child care every day -- three out of five young children. Sixty-four percent of mothers with children under age six, and 78 percent of mothers with children ages six to 13, are in the labor force. Almost 60 percent of mothers with infants (under age one) are in the labor force.

Full-day child care costs on average $4,000 to $10,000 per year—at least as much as college tuition at a public university.

According to the Work and Family Connection, there are currently about 8,000 employer-supported childcare centers in the country, including those in office parks, colleges, and hospitals. Their studies indicate that approximately 9% of employers provide childcare centers and 11% of employees work for employers who do so.

Kohl first proposed the child care tax credit legislation in 1996 to address the care and education of children under five and respond to an ongoing shortage of licensed child care in Wisconsin and across the country. Kohl's business tax credit passed the Senate by a bipartisan vote of 72-28 on June 26, 1997 as part of the balanced budget bill, but was dropped from the final legislation during last minute negotiations.

Kohl's legislation was endorsed by the Children's Defense Fund, the National Center for the Early Childhood Work Force and the National Child Care Association