Tax Policy: What Are the Tools?

This issue brief from the conference, 2004 Learning Community on Early Care & Education Finance Reform, examines the use of tax policy to increase revenue for early care and education. Taxes can be dedicated for a specific purpose (e.g., California’s tobacco tax is earmarked for early childhood development). Reasons are listed why tax-based approaches are attractive funding mechanisms. Understanding tax policy is essential for finance reform advocates to increase overall investment in early care and education. Public opinion favors tax strategies as the means to finance early care and education. The public also supports tax credits paid to working parents who have children in child care and additional credits to employers who make child care available to their employees.