Why do childless US taxpayers have to support other people's kids?

Easy bit first: I certainly do think that the tax system shouold take into account ability to pay.

My presumption would be that – counting only the adults’ welfare and assuming the households had the same money income – a household with a child is better off than one without.

Money income is only a rough proxy for capacity to pay. When a person engages is leisure or in non-market production (such as child-rearing) they are earning less money income than they could have done. Presumably they do this because they prefer to do so. So a one income couple must be presumed to be better off than a two income couple that earns the same money income, and a household which decides to forego lots of money income by having a child must really get a kick out of it.

Okay, this is somewhat tongue in cheek. This reasoning would suggest that (say) a doctor who decided to sacrifice earnings to work on worthy research must be better off by doing so and should be taxed at a higher rate on ability to pay grounds. But this is why I said I was unclear on the fairness aspects of lower taxes for families with children.

Let me try to restate my thoughts on the response to Andros, since we seem to be getting lost in a thicket of exchangs.

First, the question was why should andros “pay more” (in taxes for services or just in general) than a child-rearing family. I’ve been approaching this in a very broad framework since it seems to me the underlying answer, with all caveats to the reality of the messiness of politics, is to be found in asking what do we mean by pay more, for what and what benefits and losses are there in the aggregate. Looking at things on an individual basis never gets one anywhere.(*)

(*: thus we ignore the question of the individual parents who child(ren) don’t contribute effectively.)

I am sticking to the concept that a dependent tax deduction per se is essentially a subsidy to child-rearing. We may argue whether its a particularly effective or efficient one, but I think that in reality that is beside the point since the essence of the andros question , as I understand it, does not really depend on the specifics of the tax deduction per se, but rather the concept of subventions going to child-rearing families and andros perceiving that they’re ‘getting more’ than he. Structurally speaking, I don’t think it matters much if that is a direct subvention or an indirect one, so with all regards to picmr’s well-marked criticism, I’m going to ignore it for the purpose of this discussion.

First, I made the point that children are future workers and those future workers are in fact extremely important to the future of retirees. All your bonds and the like do you no good at all if there aren’t folks wealthy and numerous enough to buy them. In that light, having children and raising them is a good for society, child-rearing families are in fact benefitting society — insofar as we need more workers etc. Of course there’s such a thing as too much of a good thing, too many future workers too fast is no good. And of course, it would be nice if those same parents raised their children well, etc. However, all things being equal, parents are benefitting society at large. The objections in re parents not raising kids to benefit society are rather beside the point, it doesn’t matter why, just that it happens.

I forget who raised the issue of importing workers through immigration. Quite true, that option exists, however one must admit it can be expensive and challenging: (a) one has to depend on foreign workers having the right skills, or investing in training them, directly or indirectly. (b) transition costs can be challenging in terms of cultural adjustments and inevitable social costs implied — take the European example of guest workers.
It seems likely that a society will wish to ensure a degree of continuity in terms o social and economic structure, as well as culture generally, through internal reproduction, even if it does choose to partly rely on imported workers.

Next I raised the issue of quality. We all agreed that ensuring future growth requires investments in education and in the general well-being of the children, if only to ensure maximizing their future effectiveness as productive members of society, to buy your securities as you sell them off in retirement. That of course requires allocating money to families, either directly or indirectly. In this case, andros is going to end up paying “more” in direct dollar terms than a family in terms of net taxes/government services received. An inevitable result of directing some funds to families to help defray child rearing costs and raise their standard as part of the overall investment in future productivity.

Andros continues to object that he doesn’t want to pay more, even though he is “all for” these things. I’m afraid this does not stand to reason, accepting that there are positive externalities to ensuring a broad future work force with high skill levels is a good per creating future wealth. Further, accepting my argument above that parents are providing a social benefit in aggregate terms for society by taking on the cost and burden of providing future workers, we can look at their unassumed (by the state/society at large) costs as costs of future wealth production externalized unto them. Ergo, andros by not rearing a future worker to help contribute to future wealth may be externalizing costs unto parents and thus should pay more. Now, he did raise the question of savings rates, whether the childless save more which could be contributing to future capital accumulation. I think this is a bit hard to calculate insofar as they will be drawing down their savings in retirement much like the child-rearing couple who has contributed future productive workers. We certainly would have to control for differential income levels to even attempt to come up with a real answer here.

All in all I think if one thinks this through it becomes obvious that there are perfectly good, cold rational reasons to direct resources to child-rearing families, in the short term apparently ‘costing’ the non-child-rearing more. However, taken in context, that ‘more’ simply is sharing the burden for creating future wealth. Now, as mentioned in this thread, the dependent deduction might not be the most effective way to do that. I in fact agree with that. However, I thought that the most important part of andros’ question/debate was this aspect which I have attempted to address.

But let me address a few more points:

First in re Jackmanni and children damage to society, I don’t see that your presumptions follow in re damage to society and environment. Loss of resources? That presumes a zero- sum to begin with, something which we can exclude as the population of the United States has increased dramatically over a century, along with wealth. I might add also increased protection of the environment, which comes along with wealth it appears. If added children/population burdens ipso facto outweighed benefits from a well-trained, proactive workforce, one would expect to see in the United States and Europe declines in quality of life, production etc. That’s clearly not the case. Looking to the Third World, among the problems we see, in addition to the absolute problem of too rapid population growth which exceeds the societies’ ability to accumulate capital, we see severe problems in under- investment in children — i.e. in education, training, the whole kit and kaboodle, which is to say precisely the issues which I raised above. In fact, much of my discussion here has been predicated on what I have observed first hand in the third world. Absolute numbers of people are a problem, above all in areas with limited water resources — like me home now — but much worse is the issue of under-investment and mal-distribution of wealth.

Now in terms of the benefits, one can fairly clearly see that higher incomes in the hands of parents result in over-all more income devoted to children. Insofar as we can see positive results from that — one can rather easily note the negative results of poverty — it makes sense to put added income/reduce tax burdens on child-rearing families (whether that through direct subventions or tax reductions).

I’d note that I find the usage “childfree” to be fairly silly and unnecessary. Childless has a problem?

Second, in re Andros:
I am glad that I got love andros. I can only hope your sentiments are undying.

But that aside, first, in re the population increase issue. My replies focused on this because I felt you were/are raising a red herring, insofar as I don’t see the subventions to child-rearing families as an issue of population increase. If you don’t either, then we can stop mentioning this as irrelevant.

In regards to your concern about inability to pay, well, insofar as it is subjective and not amenable to rational analysis, I guess there is nowhere to go with it. However, I would only add that insofar as subventions seem largely ineffective in the aggregate, based on European experiences, in moving aggregate preferences for children one way or another, it’s also irrelevant to your question. Nor should one decide policy based on one person effects. Much the same goes for your concern re parents whose kids don’t contribute in the end. Since (a) most adults do become ostensibly productive members of society, in the most basic sense of the term (b) no social policy can control for every odd-ball or problem in society in and of itself, this also strikes me as irrelevant.

As for Libertarian:

I have but one question. Are you capable of responding in a way that does not involve setting up extreme straw man arguments?

A $500 tax credit is a LOT of money if you don’t earn much and is better than nothing !

You could say that people who can’t afford kids shouldn’t have them BUT they do and why punish the child ?

In a modern democracy with wealth distribution you will get some families / people who in a way live off the fruits of others ( what do you think criminals do ? ) BUT its better than having people out begging in the streets and at least those with a tax credit are working.

I say increase the tax credit, better schools, free school meals for all ( so those on welfare don’t feel like dolts ) etc.

In some countries like sweden people pay lots of tax BUT they don’t mind because the welfare benefits are very good and spread out - this is part of their culture, i think they even used to share out the viking raid spoils.

Would you rather pay more tax and have less poverty ?

Perhaps when the politicians stop argueing about tax rates and argue about quality of life indices then things will change around ?

Children per se do not damage society. My “presumptions” are that increasing population is directly related to loss of wetlands and other habitat (a problem that worsens flood damage) as well as pressure on energy and other scarce resources (including clean air and water). Despite half-hearted laws, our natural environment continues to degrade and will do so until we achieve a stable population and a will to turn things around. You can see “wealth” and its environmental effects in a rapidly growing state like Texas.

I deeply regret that you are offended by my use of the term “childfree”. Apparently you feel it implies a certain benefit that others lack, whereas the term “childless”…hmmm…

Leaving aside enviroscare rhetoric, I would suggest modes of consumption are as or more important than number of children. Further, I suggest that increase in wealth and greater attention to environment have resulted in a markedly improved environment as compared with the first half of the century, e.g. dust bowls, burning rivers etc.

I wasn’t offended, I just find the thinking behind “childfree” wrongheaded.

A mom here, just wanted to throw something in…

I can’t remember now whether the $500 credit per child is an actual credit against taxes owed, or if it is a $500 deduction from my adjusted gross income (AGI). Sorry about the mental block, but I didn’t do my own taxes this year!

A $500 reduction in taxes owed is a pretty big deal for me, no question. But if the $500 is a reduction of my AGI, well, let’s just say that it won’t exactly change my bracket, mmmmm’kay?

I can’t imagine anyone having a child just so that they could get a $500 tax credit, it is ridiculous. That would barely pay for two well-baby doctor’s visits, out of the dozen they will have in the first two years or so.

On a semi-related note, another way to “victimize” the people who never recieved student loans is to allow people to deduct up to $2000 of the interest paid on their federal student loans. The amount will also go up for 2001, to $2500. This little tax break is tied to income, however, so the $2000 is the maximum you can deduct for 2000, but you would have to have almost no income to get it all. We paid out over $10K in student loan interest payments last year, and got to deduct about $400 of it. Yee haw. But every little bit helps.

pantom:

Er, I guess I didn’t say it loudly enough.

I vote in favor of every school bond that comes my way. I support education, top to bottom. I want more of my taxes going to education.

And I’m a parent.

Try to watch who you’re tarring there, pally.
Collounsbury, I understand what you’re saying.

Which is the answer to the question I posed in the OP. Thank you very much.

(Although I suppose I could mention that without hard numbers, it’s impossible to say for certain how ineffective the dependent deduction is.)

As to “childfree,” I can’t see it as wrongheaded. There are those who view having children as something they do not wish to do. Thus, they are free of children. Where’s the problem?

kniz

[Moderator Hat ON]

kniz, personal insults are inappropriate in Great Debates. Take it to the Pit if you absolutely must call people names.

[Moderator Hat OFF]

My anger (misdirected as it may have been) was at the fact that you directed a smiley at Libertarian for that outrageous post. I was going along fine 'til then. If there was a joke in Lib’s post, I fail to see it.

Just to clarify further, I felt you were giving aid & comfort to someone who obviously does belong to that large & cranky opposition I referred to. Why, I can’t for the life of me fathom.

:shrug:

Fair enough, I suppose. I found Lib’s post to be quite amusing. As he pointed out, children are not automatically benefits to society, right?

You jumped to conclusions with me. Perhaps you have done so with Lib as well.

Whether a given tax preference or subsidy is well-targeted matters. But I don’t think you disagree with this, you are simply setting the issue aside. Ok, fair enough.

There are 2 justifications for a tax preference or subsidy.

  1. Creating incentives for (or against) activities with positive (negative) Externalities: The activity has side benefits (or costs) that are not captured by the market. Social bads such as pollution is an example of a negative externality.

You argued that kids represent a positive externality, since “child-rearing families are in fact benefiting society insofar as we need more workers”.

Not clear. In a world where resource extraction is subsidized and pollution is regulated but not sufficiently taxed, additional current consumers place an awkward burden on current generations (via the extra pollution) and future generations (via CO2 emissions and extra resource extraction). First world consumers have an especially intense impact.

So we have a positive and negative effect. How do they net out? I would suggest that in countries with positive population growth (such as the US) the resource burden effect outweighs old-age support effect at the margin, that is for the additional child born or not born as a result of this policy. But this is really an empirical matter, one that’s probably subject to a wide range of estimates.

Luckily, none of the preceding matters, if you believe (as I do) that the incentive effects of the $500 tax credit are small. Family leave policies are a different matter.

  1. Redistribution: It takes a village to raise a child; so singles and single-child families can jolly well subsidize multiple-child families. Personally speaking, $500 (when compared with $6000+) doesn’t bend me too much out of shape in this context. The OP notwithstanding, I doubt whether andros necessarily loses a lot of sleep over this either. But see below.

So do I like the $500 per child tax credit? I suppose the answer is, “Compared to what?” Personally, I’d rather have the funds spent on establishing national health insurance. I’m also skeptical about decreasing a budget surplus or increasing a deficit for the sake of such a tax credit, assuming we’re not in a recession.

But when viewed as a redistribution of the tax burden within the middle class, the amount is small enough (relative to the costs of child-rearing) that I’m likely to maintain my composure. I suspect though that I personally would prefer to tinker with the lower tax brackets. YMMV.

I should add that there is also a $2800 deduction per child, which works out to about $450, $780 or more? depending on your tax bracket (more for higher tax brackets, subject to limitations).

Perhaps the reason people without kids have to help those with ( via the tax system ) is that, wait for it, the tax system is not fair !

shock

horror

Whats wrong with helping kids ?

I used to be one !

Perhaps the tax system should help kids, those in need and the old.

Perhaps the rich should pay more than the poor.

Perhaps its a way to make society nicer ?

Perhaps, just perhaps, its not meant to be fair !!!

bit of a rant there, sorry about that, it gets to me sometimes…

Well, one obvious direct benefit children provide a society is its continued existence. :smiley:

Most people either have children or intend to have children and will thus benefit from the unfairness of these laws at some point in their lives. Those that never have children are a minority and are being unfairly treated because there is not enough of them to fight back.

True - in a bud advert kinda way

bud advert? Whazzat?

I agree with paying taxes as long as it is equal. So I would say get rid of the tax credits for dependents. I see a lot of posts about the cost of raising a child which was a choice. You can pay the same amount that I pay and cover the additional expenses of your child with no tax credit. I still agree with paying for schools and everything else too for our future. I see a credit though for those who have children is not acceptable. If I chose to speed and get a ticket I’ve made a choice. I have to pay the ticket. If i want to buy a new car, I pay the price. If I chose to have a child that is also a choice and would have to pay the extra expense. I saw a post where someone said it costs about a half a million to raise a child to 18 well… you have made an expensive choice but that was your choice to make. Also i believe that amount is grossly inflated. That figure would be as if you had to pay for a child to have a seperate place to live and had all seperate expenses. The cost to add an extra room in your apt and adding an extra serving to your home cooked meals would be nowhere near that amount. My sister is married, has 3 kids, a house, tons of atvs, campers, multiple vehicles, the works and pays less than I do in taxes making way more. So I believe we both can pay the same amount in taxes with no credits. I will pay for my new car and you can pay for your childs food, shelter, clothes ect. No credit though because that again was your choice.