Should parents be compensated for their contribution to society?

Last updated on: March 4, 2015 at 4:32 pm by Jane the Actuary

Should parents be compensated for their contribution to society? 2015-03-04T16:32:19-06:00 Jane the Actuary

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I said yesterday that I didn’t find it persuasive that parents pay a “penalty” in the tax code that needs to be compensated for, though, I should add, I’m all for per-person exemptions that truly reflect basic living costs, so that one pays taxes only on one’s “disposable” income, defined fairly sensibly.

But the bigger question remains that I haven’t addressed: are parents engaged in service to society for which they should be compensated in some manner? Should parents receive a “child benefit,” as is common in Europe and elsewhere, to offset the financial costs of raising children?

Such a benefit could be set in different ways; we could, for instance, compensate parents with an allocation that represents food costs for their under-18 children. The food stamp calculator, for instance for Illinois, says that each additional family member’s food costs are a decreasing amount, I suppose because they assume food costs are lower if you buy in bulk, but let’s ignore this and say that you’d get an extra $150 per month, per kid, rounded up to $2,000 per kid. We could likewise add in allocations to represent clothing or medical costs. To a certain extent, this would eliminate the difficulty of the “marginal tax rate” when a parent finds that their loss of benefits due to an increase in income means the additional training or extra hours that earned them that raise wasn’t worth it.

Such a benefit would be “fair” insofar as childless adults don’t have these expenses; it could be argued that this is equivalent to the fact that parents aren’t required to pay for schools.

But would this encourage higher birth rates, and less interest in working, on the part of the poor? Could you, or should you, restrict the benefits so that only the “good” parents receive them? — those who are on-track towards producing a productive and educated next generation?

And what would the impact be on families, on society, on the economy, on the federal budget?

On the other hand: children provide economic benefits for their parents. Yes, children provide emotional gratification in the here-and-now and the prospect of care in old age (though it doesn’t always materialize). But that’s not what I’m talking about. For a great many individuals, it is the act of becoming a parent that really brings them into responsible adulthood, so that, for every childless individual gallivanting off to Paris, there’s another who never got his act together in the first place.

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