To amend the Internal Revenue Code of 1986 to establish the Early Childhood Education Trust Fund consisting of amounts paid for the estate tax and made available to fund child care services, and for other purposes.
Summary
H.R. 4330 proposes to amend the Internal Revenue Code of 1986 by establishing an Early Childhood Education Trust Fund. This fund would be supported by a portion of estate tax revenues and used to fund child care services. The bill also adjusts the estate and gift tax exemption, decreasing it from $15,000,000 to $7,000,000, effective December 31, 2025.
Expected Effects
The bill aims to increase funding for child care by dedicating a percentage of estate tax revenue to this purpose. Simultaneously, it will decrease the estate and gift tax exemption, potentially increasing tax revenue from larger estates. This could lead to more accessible and affordable child care services, but also higher taxes for some estates.
Potential Benefits
- Increased funding for early childhood education and child care services.
- Potential for improved access to child care for low- and middle-income families.
- Direct allocation of funds to states through existing Child Care and Development Block Grant Act mechanisms.
- May stimulate the economy by supporting the child care industry.
- Could lead to better educational outcomes for children due to increased access to quality care.
Potential Disadvantages
- Decreased estate and gift tax exemption, potentially impacting wealthier families.
- The 15% allocation from estate taxes might be insufficient to meet the demand for child care services.
- Potential administrative overhead in managing the new trust fund.
- Possible economic disincentive for wealth creation due to higher estate taxes.
- The reliance on estate tax revenue makes the fund vulnerable to fluctuations in estate values.
Constitutional Alignment
The bill's alignment with the Constitution is primarily rooted in the General Welfare Clause (Preamble). This clause allows Congress to enact laws that "promote the general Welfare." The establishment of a trust fund for early childhood education falls under this purview. Additionally, the Sixteenth Amendment grants Congress the power to lay and collect taxes on incomes, from whatever source derived, which supports the estate tax provisions within the bill.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).