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Higher taxes for cheaper childcare? 3 localities are voting on it and we want to hear from you.

Nov 6, 2024, 02:55 IST
Business Insider
iStock; Rebecca Zisser/BI
  • Cities and counties are voting on property and sales tax hikes to fund childcare.
  • Other localities already have similar laws in place, with Alaska taxing marijuana sales to fund early childhood programs.
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Cities and counties across the US are coming up with ways to make childcare more affordable — and many are turning to taxes.

Three localities are voting to increase taxes to boost childcare funding for low-income and middle-class families.

Voters in Sonoma County, California, are deciding whether impose a quarter-cent sales taxes to pay for childcare and early childhood education, as well as resources for children experiencing homelessness or abuse.

Residents of Travis County, Texas — which includes Austin — will decide on increasing property taxes by 2.5-cents to broaden access to childcare for low-income families.

A similar measure in St. Paul, Minnesota, would also hike property taxes to fund citywide childcare initiatives for low-income families.

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Using tax revenue to fund childcare isn't a new idea. Local taxes already fund K-12 education in most states — a solution that works for public schools, but can leave early childhood education programs underfunded. Here's what some cities, counties, and states are already taxing to fund childcare.

Cities are looking at tax solutions to fund childcare

Some cities have already tried allocating tax revenue to care for infants, toddlers, and preschoolers. In 2022, New Orleans voters backed a property tax increase to fund more than 1,000 childcare seats for low-income families. Because of the referendum, New Orleans' childcare budget increased to $21 million from $3 million annually for 20 years.

Whatcom County, Washington also approved a property tax increase in 2022, which boosted funding by $10 million for childcare and young families' mental health in the county's annual budget. Other areas have taken the sales tax approach, similar to Sonoma County's ballot measure: Anchorage, Alaska approved in 2023 a marijuana sales tax to fund early childhood programs.

Colorado has a policy that allows taxpayers who donate to qualifying child care facilities and programs to claim an income tax credit equal to 50% of their contribution.

To be sure, local tax revenue cannot replace funding for America's whole childcare system. St. Paul Council Member Rebecca Noecker said that local policies can complement larger state-level and federal funding pools.

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Win or lose, Noecker said childcare-related ballot measures raise awareness about childcare access.

"Now people in St. Paul are talking about childcare in a way that they never were before," she said.

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