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St. Louis Fed: Biden’s Toddler Tax Hits Working Families with Higher Child Care Costs

July 11, 2022

American families already struggling with Biden-Flation can’t afford to shoulder the burden of Democrats’ “Toddler Tax” and out-of-control rising child care costs. Economists at the Federal Reserve Bank of St. Louis warn government checks will continue to push the cost of child care even higher on families into the future.


Key Takeaways:

  • Inflation is leading to higher prices for families: Child-care centers across the country – some faced with up to 35 percent higher operating costs due to inflation and Democrats’ wage mandates – have confirmed that they are passing thousands of dollars in costs onto parents in higher prices in order to continue operating. 

  • The St. Louis Fed notes that constrained supply coupled with higher demand is leading to higher prices. The St. Louis Fed notes that federal subsidies “could just increase demand—and thus, to some extent, prices—until supply catches up.” Democrats have fueled greater demand while also constraining supply by continuing their attack on affordable and convenient faith-based care, expressly prohibiting religious child care providers from receiving funds. 

  • Families are getting stranded without child care: As reported by CNN, one child-care director said, “Already, a half million families in the United States of America are estimated to be without child care because of lack of access and affordability. […] With increasing pressure due to inflation, even more families are getting stranded without child care.”


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Key Background:

Democrats’ unpaid “COVID stimulus,” with $54 billion in emergency child-care funding, has done nothing to lower child-care costs: 

  • Democrats have denied that their policies led to historic inflation, including rising child care costs. Now they’re offering only partisan gimmicks and crippling tax hikes that will push prices higher. 
  • Since President Biden took office, workers’ wages have dropped by nearly four percent, while one estimate found that daycare and preschool fees have increased by more than three percent.  


READ: Fact Check: President Biden’s Economy Isn’t Working for Women and Families


Democrats’ so-called solutions make matters even worse for working families.

  • Crippling tax hikes and the child-care entitlement plan in Democrats’ Build Back Better won’t blunt rising child care costs – they’ll make things even worse.
  • Analysis from independent experts found that Democrats’ Build Back Better plan results in a new “Toddler Tax” that raises child-care costs on working families by upto $27,000 a year, depending on where you live. 


READ: Build Back Better Won’t Blunt Biden-Flation


Republicans have a record of delivering results for America’s working families.

  • Republicans on the Ways and Means and Education and Labor Committees have proposed the Protecting Worker Paychecks and Family Choice Act – an alternative to Democrats’ top-down approach to family leave and child care– that is very popular with the American people.
  • The Tax Cuts and Jobs Act (TCJA) worked for working families, with nearly 40 million families benefiting from the increase in the GOP-expanded child tax credit.
  • Republicans have also outlined six steps to fight Biden-Flation, from cutting wasteful spending and red tape, lowering taxes, boosting investment, and unleashing American energy.


READ: Report: Republican Welfare Reform Cut Child Poverty, Democrats’ Expanded Child Tax Credit Threatens That Progress