**[Congressman Lee Terry's]{.smallcaps}**

**[Parents' Tax Relief Act:]{.smallcaps}**

**[Extends The Dependent Care Tax Credit to Stay-at-Home
Parents]{.underline}**

Unless the Dependent Care Tax Credit (DCTC) is universalized, it will
continue to represent a clear federal preference for paid day care above
at-home parenting. The Dependent Care Tax Credit (DCTC) established in
1954 currently allows parents to claim up to 35 percent of \$3,000 in
documented, nonparental child care costs such as commercial day care.
Parents with two children may claim up to 35 percent of \$6,000 in
costs. The Parents' Tax Relief Act would take the first step in
restoring equity by allowing the DCTC to help support parents who make
the financial sacrifice to be the primary at-home caregivers for their
children ages 6 and under.

**[Makes the Child Tax Credit Permanent]{.underline}**

Congress rightly increased the Child Tax Credit to \$1,000 for citizens
with dependent children. However, this common-sense credit expires in
2010. This will cause a financial hardship for many families, especially
those with low incomes. The Parents' Tax Relief Act would make the child
tax credit permanent and index it to inflation to help maintain its
value over time.

**[Increases the Personal Child Tax Exemption]{.underline}**

In 1948, a \$600 personal tax exemption was created to allow citizens
with dependent children to keep more of their hard-earned money for
their family's needs. This exemption is currently set at \$3,100,
although several estimates show it should be as high as \$10,000 to
retain its 1948 value. The Parents' Tax Relief Act would support
families by increasing this exemption to \$5,000 -- about half of its
original value. This is a necessary step to help families make the best
personal decisions for the rearing of their children and future family
security.

**[Eliminates the Marriage Tax Penalty]{.underline}**

The "marriage penalty" currently taxes married couples filing jointly at
a higher rate than two single individuals earning the same income. This
discourages marriage and unfairly burdens families trying to make ends
meet. The 2001 tax cut law reduced this penalty by doubling the standard
deduction for joint filers, and doubling the size of the 15 percent tax
bracket for married couples. Unfortunately, these reforms will expire by
2010, along with the rest of the tax cuts enacted by Congress. The
Parents' Tax Relief Act would eliminate the marriage tax penalty
entirely to ensure government does not discourage marriage or force both
parents into the workforce.

**[Supports Home-Based Businesses]{.underline}**

Many parents seek flexible employment opportunities such as home-based
business in order to care for their children while contributing to
household income. The Congressional Budget Office estimates that nine
million of the 17.3 million small businesses in the United States are
home-based, and 55 percent are operated by women. Many home businesses
are started to provide a secondary income, as evidenced by the fact that
sixty-one percent of businesses earning less than \$5,000 are
home-based. The Parents' Tax Relief Act would support parents who choose
to operate a home business by creating a standard home-office tax
deduction to replace complicated IRS regulations that prevent many home
businesses from deducting legitimate expenses -- a concern of the
National Federation of Independent Business (NFIB) and the U.S. Chamber
of Commerce.

**[Encourages Telecommuting Jobs]{.underline}**

One way stay-at-home mothers or fathers can contribute to family income
is through employer-sponsored telecommuting. The Parents' Tax Relief Act
would create a Telecommuting Tax Credit (modeled on the Work Opportunity
Tax Credit) to encourage employers to offer full and part-time
telecommuting jobs. This legislation would also ensure telecommuting
feasibility research is a qualified activity under the Research and
Experimentation Tax Credit, and allow individuals to exclude from income
the value of employer-provided computers and related equipment necessary
for work from home.

**[Protects Stay-at-Home Parents' Social Security]{.underline}**

If a parent leaves the workforce to provide at-home care to a young
child, the family's finances may not only suffer, but career
opportunities and future earnings potential may be diminished. In
addition, many women who stay at home to care for children during prime
working years may jeopardize their future Social Security benefits --
especially in the unfortunate case of disability or divorce. The
Parents' Tax Relief Act helps address these realities that parents face
by allowing up to ten years of flexible Social Security employment
credits for mothers or fathers who stay at home to raise children ages 6
and under. Public policy should recognize and safeguard parent-provided
child care as valuable work that contributes to the character and
security of our nation.

**The Parents' Tax Relief Act supports the rights of parents**

**to choose the best care arrangements for their young children**

**[Congressman Lee Terry's]{.smallcaps}**

# Parents' Tax Relief Act

# [Why Is It Needed]{.underline}?

-   Federal tax policy currently discriminates against mothers and
    fathers who want to provide their young children with at-home care

-   ***70 percent*** of mothers and fathers believe that having one
    parent at home is the "best" arrangement for the care of young
    children

-   ***60 percent*** of U.S. households with children under the age of
    six have both parents in the workforce

-   Today, a family of four may pay as much as ***40 percent*** of
    household income in total taxes, compared to only ***2 percent*** in
    federal taxes in 1948

-   ***64 percent*** of parents with young children say it would be very
    helpful if "government gave a much bigger tax break to parents who
    stay at home to care for their children"

-   ***58 percent*** of parents currently relying on child care agree
    that greater tax breaks should be given to stay-at-home parents

-   ***77 percent*** of working mothers wish they could stay at home
    full-time to raise their young children

    **[How Would It Help]{.underline}?**

-   Universalizes the day care tax credit to include stay-at-home
    parents with young children

-   Makes the \$1,000 Child Tax Credit permanent while indexing it to
    inflation

-   Eliminates the marriage tax penalty once and for all

-   Increases the personal income tax exemption to half of its original
    1948 value

-   Supports home-based businesses and encourages telecommuting for
    parents

-   Protects stay-at-home parents' Social Security benefits