Wisconsin sales and use taxes wouldn’t apply to strollers, diapers and other child care products under a GOP measure reintroduced on Monday, just over a month after it was initially proposed as a provision in the state’s two-year spending plan.
The reintroduction of the measure comes weeks after the Republican-controlled Legislature passed a budget that didn’t include the proposal or $340 million in Democratic proposals to subsidize child care.
The sales tax exemption for the products would save parents $37 million in the next two years, draft bill author Rep. David Steffen, R-Green Bay, said in a statement.
In a memo to fellow legislators, Steffen and co-author Sen. Jesse James, R-Altoona, called the proposal “a creative solution to help reduce the financial stress on young families and demonstrates our state’s commitment to prioritizing the most vulnerable Wisconsinites.”
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Steffen initially released the proposal in June, when the Legislature’s finance committee was still writing the state’s 2023-25 budget.
“The proposal didn’t make it into the budget due to the volume of text within it,” Steffen spokesperson Nicole Walentowski-Domokos said.
“We are certainly hopeful that the proposal will continue working its way through the process, but it is in the very early stages of circulation, so it’s just too soon to give any definitive answers,” she said.
The sales and use tax exemptions would apply to baby cribs, playpens, safety gates, baby monitors, child safety cabinet locks, electrical outlet safety covers, strollers, bicycle child carrier seats and trailers, baby exercisers and swings, breast pumps, baby bottles, diapers, baby wipes, and changing tables, according to the draft bill.
The economic impacts of the proposal could be significant because parents typically buy baby items right before and right after birth, which is around the time that parental income falls the most, said Jessica Pac, a UW-Madison assistant social work professor.
“If you spend $100 per month just on diapers, and you remove this 5% sales tax, that would be $5 per month, which alone amounts to $60 per year,” Pac said. “But then when you consider all the items covered in the proposal that are purchased in the same time period, it would modestly offset expenses in the first few years of life.”
Assembly Minority Leader Rep. Greta Neubauer, D-Racine, is still reviewing the proposal, spokesperson Adam Wigger said.
Care subsidies rejected
Along with not including Steffen’s proposal in the state budget that Democratic Gov. Tony Evers signed in July, GOP legislators also rejected the governor’s request for $340 million to maintain a child care assistance program that will run out of federal funding next year.
The money would have gone toward monthly payments to child care providers in Wisconsin, making the program permanent.
Evers and Democratic lawmakers raised concerns that rejecting the $340 million subsidy could have a drastic negative impact on the availability of affordable child care in the state.
The biggest costs for families when they have young children is housing and child care, so subsidizing those items would substantially impact the family budget, Pac said, adding that subsidizing those costs wouldn’t provide as much flexibility as unconditional cash transfers, such as the payments remitted in 2021 as part of the expanded child tax credit.
“But I think all of these ideas like removing a sales tax and subsidizing child care are obviously a really good place to start, especially because they’re focused on this time period when child development is very sensitive to parental investments,” she said.
Just over 63% of Wisconsin child care centers have staffing shortages and 80% of workers are facing burnout and exhaustion, a recent national survey of early childhood educators found. Conducted by the National Association for the Education of Young Children, the survey also indicated that 32% of child care center owners would consider leaving their job or closing their program if economic conditions don’t improve.
The child advocacy organization Kids Forward noted that the median pay for child care workers in Wisconsin is $12.66 an hour. Before the federal funding was provided, the median pay was $10.66 an hour, said Brooke Skidmore, co-owner of the Growing Tree, a home-centered child care center in New Glarus.
The federal government originally provided more than $300 million to the Child Care Counts program to support providers during the COVID-19 pandemic by helping cover costs of staffing and operations. That funding dropped to $90 million in June and it will end entirely next year.
The Child Care Counts program has distributed funds to more than 4,300 child care providers in the state, helping more than 22,000 child care professionals, according to the state Department of Children and Families.