More importantly it would give parents options: - stay home with your child and take the income - hire a babysitter - hire a better babysitter by adding a little cash - take your child to daycare - take your child to better daycare by adding a little cash

If the government also runs daycare centers that adds another option of taking your child to gov daycare. It also forces the gov and private daycares to compete.

The current policy penalizes people on the margin-- maybe an extra $500/mo would get your child much better daycare, but you're stuck between (likely) low quality government care, or losing a huge chunk of income to solve the problem yourself.