Use the Estate Tax to Finance Early Childhood Education

At a US Senate hearing last week on the looming childcare "cliff," ranking member John Kennedy, a Republican from Louisiana, averred that affordable childcare as policy is as likeable as a golden retriever dog, but then lamented it would simply cost too much for the government to help. It was a rather stunning declaration that affordable childcare is a bipartisan issue, followed by the sad admission that the will to fix it is not.

So, here’s an idea: Dedicate the revenue collected from the estate tax into a trust fund that finances early childhood education, spanning childcare to preschool.

The estate tax applies to non-spouse inheritors of wealth of a minimum size. That minimum has varied a lot over the past two decades, increasing from $600,000 in 2000 to $13 million for single filers this year. After 2025, the estate tax minimum will revert to $5.5 million and be set to increase with inflation. The Congressional Budget Office estimates it will take in as much as $40 billion a year at that level. That is remarkably close to the annual estimate of the childcare and universal preschool components in the Biden administration's Build Back Better bill.

There’s a neatness to that symmetry, with revenue and outlays being a similar amount. But there’s a symbolic motivation to marrying estate taxes to early childhood investments. The estate tax targets dynastic wealth, applying only to large fortunes passed down through generations. The inheritors of that wealth don’t just gain assets but incredible advantages in competition against their peers — peers who aren’t similarly endowed by their family's largesse.

Child Care Costs Outpace Inflation Twofold