Child care

Since I spent many years talking to people about taxes and heath care, I was interested in Trumps new plan and especially the part about dependent care savings accounts. This caught my eye because it is the same concept of health care savings accounts. Recall the idea there is to have employers set aside money each year for each employee to be used for health care and any money not used will be saved for retirement. This encourages users to shop for medical care and to pay for most treatments up front without going through an insurance company. The patient will get the advantage of competition from price shopping and the provider will not be burdened with filing insurance documents. With Trumps child care plan the same idea works. Money is set aside to be used for child care and eldercare and any money left over can be used for retirement. People can choose the child care provider and it can be grandma and she can be paid with after tax dollars. This creates competition which lowers cost. The downside of this plan, like all tax favored plans, is that half of the people pay no income tax so it does not help them. Part of the plan tries to address this by saying that if a person puts a $1,000 into the plan the government will add $500 to the pot so that is like a tax break. The other plans will be paid for by employers. Maybe this will open the door to use health savings accounts to replace Obamacare.