Moms: Here's why you should care about that House Budget Committee memo

Some takeaways from reading the full 50 pages

Photo by Kenny Eliason on Unsplash

By now, you may have heard that a U.S. House Budget Committee memo outlining various tax proposals was leaked.

Before we jump into what’s in this 50-page document, specifically as it relates to moms, it’s important to point out that these are options for (presumably) an upcoming reconciliation budget - it is not a done deal. Rather, the list serves as a (serious) conversation starter…. and what a conversation it has started.

For example, there is a proposal to lower the corporate rate to 15-percent, which would result in a whopping $522 billion in 10-year costs, repealing over $17 billion in funding for various energy programs (such as funding to address air pollution at schools), limiting eligibility for PSLF, and a whole lot more.

But in this long list of options are several that will have a disproportionate impact on moms, and as someone who cares deeply about both good public policy and motherhood in this country, I would be remiss if I didn’t share a few of my takeaways from reading through the full document. Because even though none of this is for sure, the fact that some of these ideas made their way onto the list at all is noteworthy.

Below is a quick rundown of what jumped out at me, including three proposals that will definitely hit moms harder (I will feel the impact of all three), as well as other notable items that I believe parents will care about. It doesn’t come close to covering everything, but it’s a start.

And while we don’t know which of the following will make their way into reality, it’s important for us to understand what the priorities are so that if and when the time comes, we can join together and advocate for ourselves and each other.

For context

Text with the blue bar is the exact description provided within the Budget Options memo, itself.

Text following the blue bar is what I have to say about it.

1. Eliminate Credit for Child and Dependent Care

Taxpayers can claim a credit for a portion of their child and dependent care expenses (up to $2,100). This option would remove the child and dependent care credit, yielding $55 billion in savings over 10 years.

We already know that when finances are strained due to childcare costs and someone needs to drop out of the workforce to stay home, it is more than likely going to be mom. The impacts of this are too long to list here, but a few include resume gaps and the resulting motherhood penalty, the inability to put money away for retirement (thus losing out on future gains), and sacrificing financial independence and freedom (not to mention mental health).

So to place an additional economic burden on families while tying it explicitly to childcare, the thing women already suffer from not having access to, will quite possibly exacerbate existing challenges and force more women out of the workforce.

2. Eliminate Head of Household Filing Status

The Head of Household filing status provides a larger standard deduction for unmarried individuals who have children. This option would eliminate the Head of Household filing status. ($192 billion in 10-year savings)

This one is obvious - eliminating the Head of Household filing for single parents will hurt.... single parents. The HoH filing status allows for a lower tax rate and a higher standard deduction for people who are unmarried and pay more than 50% of household expenses for themselves and a qualified person, such as a child.

While it was hard to pin down exact numbers, one statistic that popped up several times in my (admittedly brief) search is that mothers have physical custody 80% of the time, with 90% of custody cases being settled without intervention (for those that did involve a legal battle, men won a vast majority of the time, even when there was abuse involved, but that’s a separate issue).

That’s a lot of moms who will feel this squeeze.

3. Eliminate Deduction of Interest on Student Loans

Taxpayers can deduct up to $2,500 of interest paid on student loans from their taxable income. This option would eliminate the deduction for student loan interest. ($30 billion in 10-year savings)

In the 2022 study Gender and Racial Disparities in Student Loan Debt, researchers found that, “Young adult women and young Black adults were more likely to have student loan debt than young adult men and young white adults, respectively.”

And why are women, in particular, more likely to carry higher student debt?

Because of discrimination. It goes on to say¹:

“Young adult women are more likely to enroll in and graduate from higher education institutions. They also leave college with higher student debt levels and take longer to pay off that debt. In part, this is because of the gender wage gap—female-dominated occupations pay lower wages—and gender discrimination in the labor market. Furthermore, parents put away more in college savings for sons than for daughters…..

…. Black women are the most likely to have student debt, and they have the highest average debt levels. They experience both gender and racial wage disparities…”

Which is to say there will be a disproportionate impact on women and, as a result, moms.

---

Related:

This bill will make it harder for married women to vote

---

Other notable budget options:

Eliminate the Home Mortgage Interest Deduction

This option would fully repeal the deduction for mortgage interest on primary residences. This is a Tax Foundation score. (About $1.0 trillion in 10-year savings relative to TCJA extension)

Eliminate the American Opportunity Credit

The American opportunity tax credit (AOTC) is a credit for qualified education expenses paid for an eligible student for the first four years of higher education. Taxpayers can get a maximum annual credit of $2,500 per eligible student. This option would repeal the credit. ($59 billion in 10-year savings)

Eliminate Exclusion of Scholarship and Fellowship Income

Qualified scholarships and fellowships are generally excluded from taxable income if used for tuition and related expenses. This option would make all scholarship and fellowship income taxable, increasing revenue by $54 billion over 10 years. ($54 billion in 10-year savings)

Eliminate TANF Contingency Fund

The TANF Contingency Fund provides additional funding to states experiencing economic hardship. However, it is essentially a slush fund, providing states with excessive discretion over federal funds, and is duplicative to other federal programs. This policy option would eliminate the TANF Contingency Fund. ($6 billion in 10-year savings)

TANF stands for Temporary Assistance for Needy Families. The program is aimed at helping low-income families with children achieve economic security and stability.

Sunset Grad and Parent Plus loans

This option would eliminate parent PLUS loans, which are offered to parents of dependent undergraduate students, and grad PLUS loans, which are offered to graduate students and students enrolled in professional programs. (Savings TBD)

Which of these are you most concerned about? Any of them? None of them? Wait and see? Let’s us know!

---

Thank you for reading! If you liked this post, please consider subscribing for free. If you find my work valuable and are able, please also consider becoming a paid subscriber to support my time and effort.

1. Emphasis mine