I agree that for high income people ($150k+ for the sake of argument) it’s not strictly speaking a good idea financially to drop out of the workforce to avoid child care expenses.
However, given the way taxes on two earner families work it is a much cheaper decision then it looks like at first blush.
Maybe this is a good thing. But it is a bit counterintuitive if you think of salary in pretax dollars.
I am not sure what you are referring to, but the tax penalty for dual similar income earning married filing joint tax filers was removed in the 2017 tax cuts and jobs act.
Looks like $110k minus the taxes on $150k of additional income, which are probably ~40%, so $110k minus $60k = $50k more disposal income. I still do not see what taxes have to do with this, the $40k childcare cost is the only variable.
Also, that is ignoring the far higher probability of being able to earn $150k and more for the woman in the years agree her kids are out of daycare, plus the benefit of the woman maintaining financial independence.
As lotsofpulp said you'd be ahead by at least 50k with both spouses working even accounting for taxes at 40% which is almost certainly on the high side. Total tax rate for federal+state on the extra 150k is likely less but it depends on the exact situation.
In reality that's just pure cash. You'd be ahead even more in terms of saving for retirement which can also lower your tax basis. Benefits might also be better - some employers cover a greater percentage of the employee's premium so having the 150k spouse covered under a different plan could save money. There may be other benefits worth considering.
Also childcare at 40k is overpriced even for SF. All day preschool is 20-30k unless you're trying to get them into a super exclusive preschool as a status thing. Once they start real school you only need to cover after school care for 10-15k. So net take home would be more like 50-90k depending.
However, given the way taxes on two earner families work it is a much cheaper decision then it looks like at first blush.
Maybe this is a good thing. But it is a bit counterintuitive if you think of salary in pretax dollars.