Ordinary People, Necessary Choices: A Comparative Study of Childcare Expenses

Abstract

This Article uses comparative analysis of the issue of childcare deductions in the U.S., Canada and Israel in order to expose the non-technical nature of the business-personal distinction. The comparative analysis offered in this Article reveals significant differences in the ways in which courts in the three jurisdictions have interpreted the distinction in the context of childcare expenses. Courts in these countries have dealt with the question in very different eras and faced very different legislative environments. The differences in time and legislative background not only help explain some of the differences between the courts' decisions in the three jurisdictions, but is also used to expose the normative foundations of this seemingly technical distinction, demonstrating that the issue of childcare deductions in fact raises a question of baseline-setting. In allowing or disallowing the deduction of childcare, courts actually determine what counts – and more importantly what should count – for income tax purposes in general and deductions in particular. By exposing the baseline issues underlying questions of deduction, the Article demonstrates why it is preferable to explicitly use normative considerations in lieu of the so-called technical distinction between business and non-business deductions. The comparative analysis further raises the institutional issue, highlighting the question regarding which institution is best suited to handle the subject of childcare. As shown, exactly because this is a baseline issue, legislatures, which enjoy a larger doctrinal tool box, can offer more flexibility as required when such a variety of normative considerations should be taken into account.