High tax rates ≠ high revenues
Lower tax rates incentivize economic activity and therefore expand the tax base. High tax rates do the opposite
With the passage of the American Rescue Plan Act, the United States childcare industry is looking at roughly $40 billion in funding. Minnesota is poised to receive $550 million from the bill for childcare funding.
A reported by NBC.
It includes $15 billion allocation for child-development block grants, a $1 billion allocation for the Head Start early education program, and a $24 billion stabilization fund for child care providers. The stabilization fund money, which would be distributed at the state level, would provide funds for child care providers to deploy for a diverse array of uses.
Supporters said it was critical that the industry get a pool of dedicated funds, since a significant number of these facilities operate with few staff and on shoestring budgets, which left many unable to access the Paycheck Protection Program or other sources of Covid-19 relief funding because they lacked the overhead or operational staff to complete the paperwork-intensive process.
It is true that much like other businesses, childcare providers have been hurt by social distancing orders as well as sanitation requirements. States, including Minnesota, greatly reduced allowable capacity for providers making them lose revenue at a time when their costs skyrocketed due to increased cleaning costs. So, funding, in this case, might be necessary to mitigate some of those negative consequences and might even prove beneficial in getting providers to open back.
However, it is important legislators do not lose sight of the fact that Minnesota’s childcare woes childcare predate COVID-19. Increased funding, as in this case, will do very little or nothing address our pre-existing issues which happen to be chiefly caused by government action. Increased funding is not the ultimate solution to affordable childcare shortage that policymakers consider t it to be. In fact the only thing that government funding does is shift costs to taxpayers.
If Minnesota proceeds with the same rules that place stringent requirements on providers, we will still see shortages coupled with high prices. Only that taxpayers in this case might pick up the tab. If we want to sustainably transform the childcare industry, we have to focus on the rules that providers operate under.