Just say no to the “parent penalty” concept

Last updated on: March 4, 2015 at 7:43 am by Jane the Actuary

Just say no to the “parent penalty” concept 2015-03-04T07:43:49-06:00 Jane the Actuary

LOGO Patheos Explore the world's faith through different perspectives on religion and spirituality! Patheos has the views of the prevalent religions and spiritualities of the world.

which is, apparently, the new terminology that supporters of an increased per-child tax credit are promoting, per a National Review article on a forthcoming “tax reform” plan. (And, yes, I’ve put “tax reform” in quotes because I hesitate to apply that label to any given set of tax changes, regardless of whether they improve the system or just favor a particular set of constituents.)

Now, if you google “parent penalty” you’ll see that it was the subject of a National Bureau of Economic Research report from 2000, “The Middle Class Parent Penalty: Child Benefits in the U.S. Tax Code.” In that report, “parent penalty” was used with respect to the drop-off in benefits in the tax code as one goes from low-income (receiving the EITC) to middle-income (phase out of the EITC, but moderate benefits from child tax credits — this was in 2000 to before these were refundable) and prior to the climb for upper-income taxpayers (using the concept of “tax expenditures,” they benefit more from the exemptions for children).

I wrote about tax reform just a month ago: here I walked through the types of “tax expenditures,” here I pulled up the legal definition of “tax expenditure,” and here I criticized the concept of the “tax credit” and said that, no matter what you think of particular types of tax credits (for children, hybrid cars, whatever you want), you shouldn’t really think of these as a part of the tax system at all, and certainly not as a part of “tax reform,” but as a part of government benefits.

(And, for the record, I don’t have objections to the general concept of a child benefit, though I don’t think we need it, either, bearing in mind that the Europeans have mostly instituted this because they want to boost their birth rate, and our birth rate is doing just fine. (Kay Hymowitz tweeted the latest projections from the Census Bureau; we can of course discuss the fact that foreign-born Hispanic women have a birth rate far higher than anyone else, another time.)

Now, as a way of rationalizing additional benefits to parents (and non-refundable credits, the better to ensure that they benefit the middle-class rather than the poor), the forthcoming Lee/Rubio “tax reform” plan tries to create a new concept, that parents are “penalized” and double-taxed, for both paying taxes themselves, and raising the next generation of taxpayers, who we will all depend on to someday pay our Social Security benefits; hence, they deserve significantly increased child tax credits. This is a bad concept, both because it just doesn’t work, and because it’s snaky and ultimately gives the impression that not only are Lee and Rubio favoring their constitutents, they’re not even being honest about it.

Look — it’s true that those children, when they grow up, will be taxpayers. And when they retire, the next generation will be paying for their Social Security. That’s the way it works. But in no way am I, as parent, somehow paying future taxes because my offspring will be a taxpayer. Making that claim is itself a double-counting of tax payments, to credit my children’s future taxes back to me.

I get that it feels unfair to see those who are childless gallivanting off to Paris, or going out to dinner at Cooper’s Hawk rather than Steak & Shake. Really, when I read Megan McArdle’s food posts, or her causal mentions of travel and dining out — well, I don’t regret being a parent but I do look forward to empty-nester-hood just a bit more. But, heck, all the additional government benefits in the world aren’t going to fund more babysitting or meals out or plane tickets and hotel rooms for five rather than two — much less can they wave a magic wand and take away the worries of parenthood: will my kid make it through high school and college and successfully navigate the adult world?

At the same time, is child-rearing really just a societal obligation that the responsible among us take on, and the slackers don’t and freeload? That’s not the right answer either, even though, yes, the childless-by-choice among us freely admit that they don’t want the work that comes with having kids.

Let’s face it: the role of government is not to be “fair,” and certainly not to make life “fair,” in general. Yes, it’s “unfair” that the childless have a lot more fun, but someday will depend on kind-hearted nieces or nephews or neighbors. It’s also unfair that a person can spend a lifetime working at a factory that closes, leaving them ill-equipped to find another job. It’s unfair that a single mother qualifies for welfare benefits that her married sister, even if in similar economic straights, doesn’t. All manner of things are unfair.

But as long as it doesn’t extend from “unfair” to unjust, then the proper response is to stop whining and suck it up, and evaluate whether the proposed benefit is right in terms of its overall impact on American society, the economy, and the budget.

Uncategorized

tax reform

Previous Post

March 2, 2015

What to do about liturgy?

Next Post

March 3, 2015 The Rubio-Lee Tax Plan (with bonus Jane Tax Plan)

Browse Our Archives

Select a Category Actuarial/Retirement Issues Politics Uncategorized

Select a Month September 2026 August 2026 July 2026 June 2026 April 2026 March 2026 February 2026 January 2026 December 2025 November 2025 October 2025 July 2025 June 2025 May 2025 April 2025 March 2025 February 2025 January 2025 December 2024 November 2024 October 2024 September 2024 August 2024 July 2024 June 2024 May 2024 April 2024 March 2024 February 2024 December 2023 November 2023 October 2023 September 2023 August 2023 July 2023 December 2022 September 2022 August 2022 July 2022 June 2022 May 2022 February 2022 January 2022 December 2021 August 2021 June 2021 April 2021 February 2021 January 2021 December 2020 November 2020 October 2020 September 2020 August 2020 July 2020 June 2020 May 2020 April 2020 March 2020 February 2020 January 2020 December 2019 November 2019 October 2019 September 2019 August 2019 July 2019 June 2019 May 2019 April 2019 March 2019 February 2019 January 2019 December 2018 November 2018 October 2018 September 2018 August 2018 July 2018 June 2018 May 2018 April 2018 March 2018 February 2018 January 2018 December 2017 November 2017 October 2017 September 2017 August 2017 July 2017 June 2017 May 2017 April 2017 March 2017 February 2017 January 2017 December 2016 November 2016 October 2016 September 2016 August 2016 July 2016 June 2016 May 2016 April 2016 March 2016 February 2016 January 2016 December 2015 November 2015 October 2015 September 2015 August 2015 July 2015 June 2015 May 2015 April 2015 March 2015 February 2015 January 2015 December 2014 November 2014 October 2014 September 2014 August 2014 July 2014 June 2014 May 2014 April 2014 March 2014 February 2014 January 2014 December 2013 November 2013 October 2013 September 2013 August 2013 July 2013

TAKE THE

Religious Wisdom Quiz

How many books are in the New Testament?

Select your answer to see how you score.

22 27 66 39