Childcare tax credit for low income Colorado families advances on party-line vote

March 5, 2014 Updated: March 5, 2014 at 7:04 pm
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Rep. Pete Lee, D-Colorado Springs, left, Rep. Tony Exum, D- Colorado Springs confer in this 2013 photo. Exum's child care tax credit bill passed the House Finance Committee on Wednesday. (AP Photo/Ed Andrieski)

DENVER - Colorado Democrats are moving forward with a tax credit that could give low-income families a break on the cost of childcare that's similar to one that middle-class families receive.

Rep. Tony Exum, D-Colorado Springs, said making the tax policy more equitable was the right thing to do and would reward hard-working families for staying in the workforce.

House Bill 1072, sponsored by Exum and Rep. Brittany Pettersen, D-Lakewood, provides a $500 per-child income-tax credit to families making $25,000 a year or less. The maximum credit per household is two children or $1,000.

The bill passed the House Finance Committee on a party-line vote 7-5 and now heads to the House Appropriations committee where lawmakers will consider whether there is enough money in the budget to pay for the project.

For several Republicans, the $27 million price tag over three years was too expensive.

Chaer Robert with the Colorado Center on Law and Policy testified that a loophole in an existing state income tax for childcare means many families that make less than $25,000 a year can't claim the credit while families that earn up to $60,000 a year can.

Robert said a single-mother with one child making $50,000 a year and paying $4,000 a year for childcare would get a $600 federal tax credit.

State law allows someone in that income bracket to also claim 10 percent of their federal tax credit as a state tax credit - so she'd get $60 back.

According to the state's tax expenditure report, in 2009 people claimed about $3.4 million in the state child-care income tax credit.

But a single mother making $15,000 a year and also paying $4,000 in childcare expenses likely doesn't pay federal taxes because her income level is too low. Although Colorado law enables them to take a larger percentage of their federal tax credit, 50 percent of zero is zero.

HB 1072 would instead enable that parent to take a $500 tax credit if they have one child - less than the parent making $50,000 a year receives from the state and federal tax credit combined.

Rep. Spencer Swalm, R-Centennial, opposed the bill saying it was "simply going to give more incentive for single mothers to continue this practice, which I think in my opinion is kind of a disaster for this country."

Rep. Kevin Priola, R-Henderson, said he supported the bill initially because it rewards work as a way out of poverty.

"I think the $27 million is still unmanageable," Priola said.

Exum said the bill's sponsors worked hard to reduce the fiscal note, bringing an amendment that would ensure anyone who qualified for the federal tax credit couldn't also get the second state tax credit. And he added a three-year sunset to the credit ensuring lawmakers will reevaluate and budget for the program.

"We're fiscally responsible too," Exum said.

It's estimated about 50,000 Coloradans could qualify for the tax credit.


Contact Megan Schrader


Twitter: @CapitolSchrader

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