Republicans favor expanding employer child care tax credit; providers skeptical

Yahoo

14-05-2025

Corrine Hendrickson, child care provider and advocate, waits to speak at a rally in front of the state Capitol Tuesday, May 13. (Photo by Erik Gunn/Wisconsin Examiner)
Republican lawmakers have filed a proposed bill expanding an existing state business development tax credit related to child care. Child care providers who want to see a permanent state investment in their work said the bill was an inadequate gesture.
The state's current business tax credit for child care applies only to capital expenditures for an employee child care program. The proposed bill would expand that to include other costs, including operating a child care program for employees, reimbursing employees for child care costs and other costs related to child care benefits.
'These changes will increase the number of available child care slots and provide more options for families,' wrote Sen. Howard Marklein (R-Spring Green) and Rep. Karen Hurd (R-Withee) in a memo seeking cosponsors. 'While not a silver bullet, these changes are another step in the right direction to address the child care issue in Wisconsin.'
Critics dismissed the measure as inadequate.
In a press release Rep. Randy Udell (D-Fitchburg) sent out after the Assembly's floor session Tuesday, he noted that last week the Legislature's Joint Finance Committee 'shot down 612 budget items including $480 million in childcare funding, and they proposed a childcare tax credit in its place that would benefit corporations instead of childcare providers under threat of closure.'
Shawn Phetteplace, national campaigns director for Main Street Alliance, sent a memo to lawmakers Tuesday also dismissing the proposal.
'Providing a 15% refundable business tax credit for businesses providing child care benefits will not appreciably increase access to child care for Wisconsin workers,' Phetteplace wrote. 'It will simply be another tax break for large corporations. A similar credit exists at the federal level, the 45F credit, which is widely regarded as not achieving the goal of increasing affordability and accessibility to childcare for employees.'
Corrine Hendrickson, co-founder of Wisconsin Early Childhood Action Needed (WECAN), said at a Capitol rally Tuesday she would like to meet with Marklein, who cochairs the finance committee, as well as Rep. Mark Born (R-Beaver Dam) the other cochair.
The business tax credit is refundable: The credit recipient receives the full value of the credit back from the state, even if it is more than what the recipient owes in taxes. Hendrickson criticized the lawmakers for 'refusing to do the same for our hard-working families with the child and dependent tax credit.'
The state's child and dependent care tax credit for families, which was expanded in legislation enacted in March 2024, is not refundable. That effectively makes the tax credit worth much more to people with higher incomes than to those with lower incomes, as the Wisconsin Examiner has previously reported.
'We are not going to accept anything more that will entrench the wealthy and well connected into our system of having success in life,' Hendrickson said.
Born issued a statement this week that declared Republicans were focusing on other alternatives to the proposal for $480 million in subsidies for child care providers.
'Legislative Republicans have consistently supported a targeted approach to helping families afford child care, build provider capacity, and support recruitment of child care professionals,' Born said. 'Parents are best equipped to make decisions about the needs of their children and Legislative Republicans are committed to providing parents with options, helping families directly make child care more affordable.'
Born said the Legislature spends 'almost $1 billion' for child care.
Hendrickson said that virtually all that money is from the federal government and simply passes through the state budget. Only about $24.4 million comes from the state as a required match.
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