It's simple. First, your $1200 is not $1200 because it's taxible income. Second, this credit benefits stay at home parents the most - it encourages more people to stay home. Baby boomers are retiring and all experts are warning of huge labour shortages ahead. When you are expecting labour shortages, you want to encourage people to work, not to stay home. That is, you provide good quality daycare centers, so that people can drop they kids off and go to work. Without affordable, good quality daycare, people stay home to take care of their kids. The problem with labour shortages is the following: too few workers puts upward pressure on wages. High wages makes everything more expensive to produce in Canada and cheaper to produce overseas. In conclusion, this $1200 credit has to be paid for by working people and businesses, so it's a tax on the economy. This credit is a tax on the economy both in terms of pushing taxes up and pushing wages up. This means exodus of canadian businesses and capital to other cheaper places overseas. It also means that there are too few working age Canadians to support a large ageing population. As the Conservatives said "It's bad policy but it's great politics"