D. Dowd Muska


Family Planning, on the Right and Left

September 17, 2015

Got kids? Liberals and conservatives really, really want to help you.

The Taxpayer Relief Act of 1997, enthusiastically signed into law by a triangulating Bill Clinton, won overwhelming support in both houses of Congress, by fedpols from both parties. The legislation created the Child Tax Credit (CTC), which the IRS explains currently “may be worth as much as $1,000 per qualifying child depending upon your income.”

Summarizing the credit’s impact, economist Jeremy Horpedahl wrote that “the CTC subsidy … has grown to nearly $60 billion, placing it among the list of the largest ‘tax expenditures’ as defined by Congress’s Joint Committee on Taxation.”

It’s likely to get larger. The tax-reform plan released earlier this year by presidential wannabe Marco Rubio (R-FL) and his Senate colleague Mike Lee (R-UT) would expand the CTC to “a maximum of $2,500 per qualifying child” and ditches the “phase-out [that] exists under the existing child tax credit.”

Why the enhancement? “[P]ayroll taxes fund the entitlement system, and this plan is specifically aimed at eliminating the inequity of tax treatment for those financing the entitlement system in the future via investment in children.”

Incentivize childbearing, to improve the solvency of nationalized pensions and healthcare -- it’s an idea Robert Stein pushed in a 2010 essay in National Affairs. The former Treasury Department official argued that “raising children is hardly just another pastime: It is one of the most important services any American can perform for our country. … Our nation’s long-term economic prospects are threatened by a declining fertility rate that, if it remains constant, will only barely manage to replace our current population. And even as Social Security and Medicare depend on large numbers of future workers, they have created an enormous fiscal bias against procreation, undermining an important motive for raising children: to safeguard against poverty in old age.”

Creepy collectivization of children, that. As libertarian economist Daniel J. Mitchell objected, “My children are individuals, not a ‘service’ to prop up entitlement programs. I agree with Stein that these programs are a problem, but the solution is to reform entitlements, not to rejigger the tax code in hopes of pumping out more taxpayers.”

But let’s not harp on the right. The moonbat community also considers the CTC sacred. In a recent policy paper, the Center for American Progress (CAP) recommended making it “fully refundable,” eliminating the “minimum earnings requirement of $3,000, which excludes many families whose budgets are the tightest, such as parents who are underemployed or looking for work,” indexing “the value of the credit to inflation,” and creating “a supplemental Young Child Tax Credit of $125 per month for children under age 3.”

A separate CAP study goes further. With over “12 million children in the United States under age 5” being looked after by paid non-parents, many “working families struggle to find affordable, high-quality child care.” What’s needed, of course, is the “High-Quality Child Care Tax Credit,” to provide “up to $14,000 per child.” The perk is essential, because -- here it comes -- “the United States spends comparatively less money than other countries when it comes to helping families afford child care.”

The labor force participation rate of women with children under age 6 was 20.2 percent in 1960. By 2010, it had more than tripled, to 64.2 percent. Working moms lean toward the Democratic Party, so look for Hillary Clinton to quickly get behind CAP’s plan.

Left and right have united behind tax gimmickry, rather than wealth creation, as a tool to help child-rearing households. In the minds of many, the Bush-Obama economic implosion has created a “new normal,” with incomes incapable of returning to pre-Great Recession levels. With that assumption at work, it’s easy to see why playing with the tax code is preferred to the tough work of rate cuts and regulatory relief.

Critiquing the Rubio-Lee plan, the Calvin Coolidge Presidential Foundation’s Amity Shlaes and Matthew Denhart averred that tax reform “achieves its goal best with only one target: growth, the unpoetic kind. A pro-family outcome can result from a pro-growth policy, but not the other way around.”

Not long ago, a consensus seemed to be emerging that federal taxes needed a serious reorientation toward simplicity. In 2005, a presidential advisory panel concluded that the nation had “lost sight of the fact that the fundamental purpose of our tax system is to raise revenues to fund government.” It’s a decade later, and the tax code is as byzantine as ever -- and perhaps, about to get worse.

D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.

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