Obviously it would work in the broad sense. We could easily solve fertility with the tax code, the childless would just hate it because they couldn't free ride anymore.
I'm not sure income taxes alone are the best bet. A household making $100k (which would be above average) that contributes to their 401k only pays $5,800 in federal income taxes a year. Six kids works out to less then $1k/kid, less then the child tax credit.
A household with $200,000 a year only pays $24,000, despite being in the 90th percentile. Having six kids works out to about $4,000 a kid, not that much more than current child tax credits.
Of course if we took a wider view of taxation. Payroll, state, sales, property, etc then you could easily do what you're proposing.
The most obvious way to increase financial incentives to parents that would cost the state nothing are school vouchers. The same money under parents control would increase utility for free, and that's a lot of money ($25k/kid/year in NYC, more then a 90th percentile household pays in income taxes).
P.S. Payroll taxes have an obvious direct relationship since todays children are tomorrows contributors, so those that have taken on the expense of raising children have already done their part.
I’m childless and I pay into the system. But I don’t see much in the way of tangible benefits from much of what I pay that nominally supports parents and children (e.g., public schools may have intangible benefits but not tangible ones because I have no kids in the system). I feel like I’m subsidizing the breeders not the other way around. On the work side, I see the childless picking up the slack for those with children.
I can see the benefits of increasing fertility, at least to maintain replacement level. But I struggle with punishing the childless.
You have contributed essentially $0 to your own retirement benefits. The systems are pay as you go, and so only future children can pay for your retirement. Every dollar of social security and medicare will therefore be freeloading, and this is the source of the fiscal cliff.
Even if there wasn't the issue of pay as you go, retirement benefits are basically a claim on future services provided for by other peoples children. Without those children there would be no services to purchase.
The fairest way to do this would be to increase payroll taxes on the childless and reduce them on breeders. Then in at least some sense you could say you contributed to the raising of the next generation of contributors.
I'd say public education is tricky because it's not really paid to parents but to the school system. Who's the recipient of the benefit? I don't think its hard to make the case its the education system and its stakeholders more then the parents or children. This was particularly apparent over the last few years.
Anyway, I think school vouchers would be a great way to give utility to parents and increase fertility without costing any additional money. Unfortunately, the childless are by and large leftists and oppose school vouchers. Many seem to view the public education system as a way to indoctrinate the children of others since they did not have their own. Obviously not all childless people feel this way, but it's a very common explanation given for opposition to vouchers which is statistically significant among the childless.
"I can see the benefits of increasing fertility, at least to maintain replacement level. But I struggle with punishing the childless."
By definition if the change is to be revenue neutral then the childless must pay more for the breeders to pay less.
Ah. Medicaid and Social Security. Two programs I pay into but expect to receive zero benefit from if/when I am eligible. Ideally, they are pay-as-you-go with current contributors paying previous contributors benefits. But that math no longer works (and is related to fewer children eventually contributing to the system).
My retirement accounts are funded by me, and have present values greater than expected payouts via government programs. I deferred current benefits for future ones. If you want to argue that constitutes burdening future generations, then any investment fits that criteria with a long enough time horizon.
I would be happy with you forgoing your SS/Medicare out of fairness, but I expect the uptake amongst the childless for that proposal will be close to 0%. Having them pay more in taxes now to give tax breaks to people having kids seems a lot more realistic of a solution.
I have little doubt that a smart person with no children has had enough money lying around to build up a 401k.
Are childless people investing in companies with higher ROI than the future contributions of their children to the economy? On net I'm highly skeptical. I suspect a lot of the money they save goes into additional consumption and zero-sum bidding on rival goods.
If they are investing in companies, those companies are going to need workers in the future. For the most part I'm proposing that smart successful people who are likely to have have smart successful kids get money for having kids. That seems pretty high ROI.
The average yearly tuition for private school is $12,350. It's probably fairer to say that there are a lot of private schools that are a bit lower than that and a few ritzy prep schools that are way higher than that. My county spends $22,000 per kid and the local private school costs $10,000 in tuition.
Daycare requires a lower student:teacher ratio because they are young, it's really not that expensive to provide K-12 schooling. Public education used to spend 1/3 inflation adjusted compared what it does today, but it's a powerful lobbying force.
The US personal savings rate is 3.2%. The 90th - 99th percentile in household income only saves 12% of their income.
So I don't think it's going into savings and investment. I think it's going into housing, cars, restaurants, and vacations. That's what people brag about in these DINK videos isn't it.
Even so, doesn't this prove the point. People with children have much higher expenses so they need more income before they can start to save. When I come across additional income, I save it for my kids future.
I don't really understand your labor argument. It seems contradictory.
I encourage you to look at a breakdown of K-12 spending and decide for yourself what is driving it. When I've done so the answer I've come up with is "lots of fat".
Free ride? I've paid insane amounts of taxes for decades -- even before I was a citizen and so had no representation. I've received ZERO in unemployment, SS, Covid payments, etc. I'm now being forced to pay "back" $6000 in health insurance benefits that I didn't ask for and didn't receive with no recourse. My feelings about your description are not printable here.
Obviously I'm describing the fiscal contribution of two identical people other than the fact of one having children and one not. Wealthy childless contribute more than they take, and poor breeders probably take more than they contribute.
But wealthy breeders contribute more than wealthy childless. For they contribute not only their own surplus, but the surplus of their children as well.
Of course I speak only of taxes here. Wealthy childless are terminating genetic lines that generations worked to create. And their own wealth is in no small part a result of those genetic gifts.
If one had any sense of fairness, one would want to pay their fair share such that a childless could say "I paid my fair share and this is just a lifestyle choice, not shirking." But I can understand why one would prefer denial.
Having children is only one way of passing along future value. Why punish people on one dimension?
I prefer to continue my genetic heritage by not dying. If that works out, I can have children later when I can afford them and when I can focus on doing a good job raising them.
Accusing people of denial is not going to open them to your arguments.
Fairness would mean taxing more heavily people who have encouraged the growth of government and regulation.
I'd be willing to wave your income taxes if you win a Nobel prize or do something else with a genuine legacy.
But I'm guessing you're not some great man that absolutely needs to focus on his society changing work and can't have a family (BTW Elon Musk has like 11 kids and he's launching rockets into space, what's your excuse).
I'm guessing you're just some dude that likes extra disposable income and hopes someone else will have the kids to take care of you in old age and continue your society.
"I can have children later when I can afford them"
If we pay you to have kids you can afford to have them right now. This is a big part of the problem. People compete for rival goods like real estate and the like and "don't have kids" is like a cheat code to try to get one up on the battle for these positional goods. Everyone keeps spamming the cheat code in a Red Queen Race and we end up where we are.
No, I'm someone who is savings heavily for retirement, not depending on others.
Your concept of fairness is nonsense. Having children is only way of contributing. Children are also a consumption good which the childless subsidize.
If you were to propose cutting government spending and giving more of the savings to people with children, it would be less objectionable. Otherwise, it's just another excuse to extort more money for useless and socially destructive government spending. Fortunately, you don't make tax policy. If such a policy were enacted, many of us would leave the country.
Another way of contributing is to pay taxes. But you don't seem to want to do either. Just have everyone else take on societal upkeep for you while you free ride.
I don't wish the government to have any more money. I would prefer it to have less. But to the extent the amount of government spending is to remain constant, I think the childless should pay more of the tax and breeders less.
"If such a policy were enacted, many of us would leave the country."
I think this is unlikely posturing. But if true I think you should be charged an exit tax because of all the resources and opportunities that were invested in you by the society. Once you've given back what was given to you then you are free to go, but since free riding is your modus vivendi this will probably remove your motivation.
For whatever amount of building we have, the childless will always have more income to outbid breeders with the same gross income without changes to the tax code.
In my own development we have gigantic houses in a good school district. Like 5,000+ sqft. A majority of them are owned by boomers with no children. I don't quite understand why one or two people need a 5,000 sqft house, but that's how it is. Many of them only live in their houses part time. Meanwhile, basically every single friend I have that didn't lock in their mortgage before 2022 can't buy a house, most of them are college grad professionals with good jobs. They have to rent apartments or tiny townhomes and they aren't building equity. They aren't keen to have a bunch of kids while living in a dinky apartment they pay several multiples what I do for a huge house.
Adding to aggravation of this is the fact that my wife and I tried to have a baby -- going through the expense and great emotional turmoil of fertility treatments -- but failed since my wife is significantly older than me and was past the point where it would work.
No this is bullshit, you don't get to take credit for your kids, they'll be taking credit for themselves. By that system, your dad already took credit for you, it's ridiculous. I guess I'm a wealthy nonbreeder bc my household pays over $100k a year in federal income tax. I've never gotten a tax credit or rebate and one of those Covid checks or any tax break in my life. At my firm, all partners equally share in the overhead to provide full insurance to all employees without employee contribution to premium. Family plan costs $30k a year, my plan costs $6k a year, yet I share equally to pay for all those people with 4 and 5 kids. I pay 5% of my income with no cap towards schools I don't use. I pay for Medicaid for the 55% of babies born to parents (or A parent, more likely) who can't afford insurance. And then people like me, when we die, rather than just leaving everything to our own kids will be endowing much larger pots to charity. This is utter nonsense. People act as if all their kids aren't also consuming and using massive resources.
Childless people are typically very risk averse, long range planners who are quite careful with money and leading nice quiet lives not bothering anyone. Leave us alone and stop trying to dream up ways to suck more resources from the system for your own little private dynasty.
In order to pay $100,000 in federal income tax you would need a pre-tax income of $400,000, assuming you didn't itemize at all.
Fertility tends to increase after household income reaches $300,000, and that is often with two incomes. So you're way past the level at which most people feel comfortable having lots of kids, you must be really committed to the lifestyle.
I don't know what charities you plan to donate too when you die, but most seem to be awful. I highly suggest donating it to getting smart people to have more kids. The ROI is higher than anything else you could do.
I don't support the public schools, and I note that the childless overwhelmingly vote Democrat and support the public schools. They even vote for school board elections! So I don't really credit the childless with funding public schools I don't support or value, if they stopped voting we might even get school choice.
I don't think people on Medicaid should be having kids and I don't support a child benefit that would go towards them. I think the child benefit should scale with income so people like yourself would actually get huge tax breaks if you decided carry on the genetic legacy bequeathed to you by thousands of generations.
Why do you assume children will contribute a surplus? Wouldn't a childless person have a more positive impact than a similar "breeder" with 10 negative impact kids? Why should the childless person subsidize this breeder's lifestyle?
"Why do you assume children will contribute a surplus?"
I'm assuming the child subsidies are tracked to provide greater subsidy to higher earners, per the original post that wishes to tie it to income taxes. High earners have good genes and their children will likely be high earners because it's heritable.
Obviously, I don't think we should pay ghetto mamas a bunch of money to have ten kids.
I met my wife at 40 years old and we married at 43, so children weren’t really an option. We’re wealthy (combined $450k/year), and we live in California, so we pay a significant share of our income to taxes due to our very progressive tax system here. The idea that we don’t “pay our fair share” because we’re “terminating genetic lines” that our ancestors “worked” (do you mean sex? Your poor spouse) to create is asinine. My wife and I very happily pay huge amounts of taxes each year and we rely very little, relatively, on government services—certainly far less than our neighbors with school-aged kids. We also save for retirement and will not rely on others to pay for us. So miss me with this stupid take. Anyone who describes working-class parents as “poor breeders” is clearly an idiot.
Most high earners manage to have kids. People who earn the same amount that you do and did manage to have kids have simply done more and should be paid for the expense of bringing high value children into the world.
Also, I wouldn't be to proud of being a high earner. If you're high IQ and don't have kids, that's like bare minimum expectation.
Waiting too long to get married and have kids is a common error people make with their lives. Obviously, you both could have made different choices to end up with a different outcome. If you prized waiting so much that's fine, but now you have to pay. Once the finances of the matter have been fairly squared society doesn't have to render an opinion on your choices.
I'm offering to take away the guilt of failing to have kids by giving you an opportunity play a role in the raising of kids that people like yourselves did have. You could choose to live in bitter denial over this rather then take a positive role, but I don't have much sympathy if you go that route.
What about people who adopt? They are not increasing the total children in the world but they are bearing the costs. If they adopt from outside the country they are increasing the population of the country.
Adoption is good though usually less good than breeding (the best reason to adopt would be if you couldn't have kids). Fertility these days is lower amongst those with above average genetics and kids put up for adoption are generally of lower quality.
As I'm sure you know, Hungary has a policy along these lines--in 2019 no income taxes for women with 4+ kids, in 2023 (iirc) they added no income taxes for women who have a kid by 30. As I read the popular press articles, it seemed to apply only to the womens' income (which would make it a lot less effective than Bryan's proposal).
I haven't seen any papers measuring the impact yet, but I'd like to.
For starters, is it just no income taxes for the women? What about their husbands?
Most women having 4+ kids want to be a SAHM, not work a demanding career. Or they at least want to take a break when the kids are young. Things like subsidized daycare or tax breaks (on the woman's income only) kind of miss the point.
Looking at that chart, I can only assume Lyman was being sarcastic. Beating in level? wtf. As for trend, it may not be obvious at a glance but TFR figures are actually hard to interpret. For instance, in Hungary before 2011 maternal age at birth was growing rapidly and depressing measured TFR by ~30% (so-called momentum correction). Once this transient was over, Hungary's TFR recovered to the level of its neighbors such as Czechia (which Lyman curiously neglected to show on his chart). I.e. Orban's policies did not do much of anything except for PR, which is of course the whole point for a politician. https://twitter.com/CandideIII/status/1529023219654873088
How about your social security benefits depend on your number of kids and preretirement income? 0 gets you 1/3, 1 gets you half, 2 gets you the full amount, and you get a 10% bump upto six. If you can prove permanent infertility or disability before 40, you get the full amount.
Utter nonsense, smaller populations will help humanity win the battle against life threatening climate disaster and help save the other species we share the planet with by protecting their shrinking habitat.
Robots equipped with artificial general intelligence will wipe our aging asses and grow and prepare our food. Young people will have less competition for jobs so their wages will rise and with less demand for housing the cost of the existing housing stock will become more affordable. Nobel Prize winner Paul Krugman recently looked at low birth rate Japan and penned an amazingly optimistic report on its economic conditions. "In some ways, Japan, rather than being a cautionary tale, is a kind of role model - an example of how to manage difficult demography while remaining prosperous and socially stable.
"Saving for retirement" is another way of saying "forgoing consumption now so that I can have claims on future production". Which is a perfectly reasonable thing to do, but the future production still has to come from somewhere.
In the limit, consider a society where everyone saves for retirement but no one has kids. What happens when they retire? Effectively high inflation, as more and more saved-up claims on production (money) chase a smaller and smaller amount of actual production (goods and services).
So children who are being born now will support retirees tomorrow not financially (though they might do that too) but via actually producing the goods and services those retirees need/want.
Now of course you could replace "children" with "immigrants" for production purposes, and that might still work. That has other concerns, obviously.
If a country adopted this policy, I don't think it would last two decades. The moment some very rich and very prominent citizen of that country had their sixth child, controversy would ensue. Is it fair that such a rich person pays zero income taxes?
Also, when you say "because their current fertility is so low" you seem to imply that high-earners' fertility is lower than that of middle-class earners. That is not the case for most countries with low TFR. Fertility is lower for highly-educated women, but not for high-income women.
Fertility has a negative relationship with income until household income reaches something like 300k. This is the top 5% of households (higher if we talk about people in childbearing ages with kids). You can't populate the next generations smart fraction if you need to be in the 1% before you can buy more fertility.
Agreed. But that's not the point I was making. My point is, I think Bryan's proposal would be viable only for a short time before becoming too controversial.
People react to incentives. Fertility rates wpuld rise if this adopted. But do these tax adjustments constitute subsidies (in a sense) to those receiving them? Also, those tax adjustments discriminate against tax payers who are infertile and/or don't want to have children for whatever reason. The tax system is unfair to them that way. But I agree. There is no fertility / demographic problem. There's only social security system, tax system and pension system problem.
My understanding is that we have data on this and that long term incentives are nowhere near as effective as simple cash payments on birth.
As such, I tend to think the long term tax breaks are less about actually incentivizing behavior and more about moralizing. Just fucking give people cash for births!
In Poland, we have no income tax for both parents of 4+ children. I don't think that's very effective - with recent changes in income tax, the tax-free amount went way up, and larger families with one income, a SAHM and child benefits are pretty well off and pay little to no income tax anyway.
Another thing we have in Poland is free minimum pension for mothers of 4, which waives the requirement of 20 years of employment for women. This has way more impact on SAHMs who would either need to work or have no pension otherwise. I think it's more effective, though I have only anecdotal evidence: I have a SAHM of 3 in my family and she actually considered having a 4th child to get the free minimum pension.
Hi Bryan, I wrote a post responding to this where I do some back of the envelope calculations, but mostly where I try to outline why I think it's more efficient for tax incentives to kick in only once families get to the third baby. That said, I think your proposal would move us pretty close to replacement from current levels. Would love to know what you think:
Applying these provisions to the taxes on MEN's income could be problematic. Doing so would HAVE to depend on some mother's certifying the man's/men's eligibility. Paternities outside of marriages (VERY common in Iceland, USA, etc.) could give rise to all manner of shenanigans. So would refusal to recognize such. A market in certifications would surely arise.
Elon Musk (11 children so far) will pay NO taxes, ever.
If a government adopted such a policy, it'd get voted out of office the following election and the policy reversed. Few people would have more kids, because they could anticipate that outcome in advance (except some families that were on the margin of having one more child would do it to get the 1-4 years' worth of tax break).
If you assume the policy is somehow set in stone then the effect largely comes from how it impacts young people who have more leeway to make big changes to planned family size and expect to get the payout for a larger fraction of their lifetime income. So I'm going to ignore the 2-decade part of the question and just try to guesstimate the long run effect.
Doing a simple estimate using average per-quintile income and effective federal tax rate, and a base cost of raising a child that starts at $17k/year for the first one and goes down slowly for more, the only people for whom the math is a net savings is the 5th quintile, with the first child representing about 16k of savings, the rest being pretty close to zero (ie. the tax break is close to the expected spending).
So the biggest impact is converting upper income zero-children families to 1+ children families (about 15%-20% of couples are childless, and they're over-represented in the upper quintile, so maybe 5% of the population overall). So my best guess is a 0.05 to 0.125 increase in TFR from that demographic alone, another 0.15 from the remainder of the upper quintile, an effect 1/3 as strong on the next quintile, and 1/2 that on the middle quintile (bottom quintiles pay essentially no federal tax, so they're not incentivized).
That gets me to a TFR impact of between 0.3 and 0.4125, which would get the US to replacement or just slightly below it.
Correct, I think its impossible to solve the fertility crisis without a constitutional amendment that gave parents votes on behalf of they children. As it stands the median voter is either childless or an empty nester. The fiscal cliff is the inevitable result of olds being able (and quite willing) to vote while children (or their parents on their behalf) can't.
The vast majority of those old people have children; voting for the fiscal cliff is perfectly rational: generous benefits saves them money that they can pass on to their children. Parents aren’t more altruistic voters ‘because they have a stake in the future.’ Arguably they have a lower circle of concern precisely because they have kids. Do fertile regions like the Middle East seem well governed because everyone has a steak in the future there with all their progeny? Or does putting family above all else not lead to rampant corrruption?
The only way to actually make voting more rational would be to allow buying and selling votes.
By definition, the only way we can have a fiscal cliff is if old people didn't have enough children.
I'm not asking parents to be altruistic voters. I'm asking them to be selfish voters. The more selfish they are the more kids we will have, which is a good thing.
Your model is of an intergenerational conflict over wealth transfer, with one side out-muscling the other. If that were the case your solution would help.
If you somehow limited the franchise to young people, social security benefit reductions would still be voted down 2-to-1. There's no way to re-weigh the votes by demographics that will give you the policy outcome you want.
I didn't say "young people" should have more of a vote.
I said "parents" should be able to vote on behalf of their children. Preferably married parents.
Parents, especially married parents, are much more right wing then non-parents and the young.
Status quo bias is huge in politics. Nobody wants to cut anything. But if "benefits for parents" and "benefits for olds" were both status quo benefits that came into conflict, who had votes would determine who won that conflict.
I understand that you were being more specific than "young people", it's just hard to get good data on exactly what married parents with children still in the house believe about social security spending. The effect would have to be drastic to work out the way you want. Merely turning the typical democrat into the typical republican isn't enough.
If asked to choose between cutting benefits for sympathetic group 1, or for sympathetic group 2, an overwhelming majority of Americans will choose "Tax someone else"/"Borrow more money"/"Print more money" every time. The ability to actually force voters to choose between two ways to spend money, instead of going for both at once, would basically be a superpower for fiscal problems.
Right now "money for olds" benefits from status quo bias versus "money for kids". I'd like to put them on the same playing field. We never even really decided that "money for olds" is something we wanted. People just kept living longer.
Moreover, I take fiscal bankruptcy as a mathematical inevitably if we can't solve the dependency ratio. If the money is destined to be wasted on nursing homes (or something even worse) it would be better to spend it on children now. Many cultures have suffered bankruptcy (think Germany and Japan) and young people dug them out. They are all you have left when everything else is gone.
Robin Hanson did the math and if you really could get smart people to have more kids even debt financed child tax breaks make fiscal sense.
Robin runs down the arguement on his substack pretty well, you can go there for the long version.
Basically I think we will enter a demographic doom loop that causes our society to implode. The young will be enslaved to provide for the old, and in response to their enslavement they will themselves have fewer children. The dependency ratio will just get worse and worse.
Beyond that, there does seem to be a sense based on surveys that people desire more children but fail to achieve that desire. I believe this is because they feel caught in a Red Queen Race over rival goods and they are tempted to reduce their fertility to win that race. Then everyone does it and they all end up in the same place minus the kids they wanted to have. If you rebalance the incentive structure then people will stop playing defect/defect.
Fertility struggles can be extremely anxiolytic and depressogenic, especially for the aspiring mother. The idea of trying and failing to conceive all year, then getting hit with a tax penalty at the end of it - well, it does seem breathtakingly cruel.
“Dear Sir/Madam, enclosed is your medical exmemption, comprehensive testing demonstrates that you are certifiably dysgenic.”
An actual practical application for human polygenic screening! Dig in, you can find squirrelly genes and psychiatric flaws in anyone soon *happy squee*
Every time I see a fertility post that doesn't have even one picture of a cute baby, I understand why the fertility rate is so low.
Helpful: https://ishayirashashem.substack.com/p/look-at-cute-babies
Obviously it would work in the broad sense. We could easily solve fertility with the tax code, the childless would just hate it because they couldn't free ride anymore.
I'm not sure income taxes alone are the best bet. A household making $100k (which would be above average) that contributes to their 401k only pays $5,800 in federal income taxes a year. Six kids works out to less then $1k/kid, less then the child tax credit.
A household with $200,000 a year only pays $24,000, despite being in the 90th percentile. Having six kids works out to about $4,000 a kid, not that much more than current child tax credits.
Of course if we took a wider view of taxation. Payroll, state, sales, property, etc then you could easily do what you're proposing.
The most obvious way to increase financial incentives to parents that would cost the state nothing are school vouchers. The same money under parents control would increase utility for free, and that's a lot of money ($25k/kid/year in NYC, more then a 90th percentile household pays in income taxes).
P.S. Payroll taxes have an obvious direct relationship since todays children are tomorrows contributors, so those that have taken on the expense of raising children have already done their part.
How exactly are the childless freeloaders?
I’m childless and I pay into the system. But I don’t see much in the way of tangible benefits from much of what I pay that nominally supports parents and children (e.g., public schools may have intangible benefits but not tangible ones because I have no kids in the system). I feel like I’m subsidizing the breeders not the other way around. On the work side, I see the childless picking up the slack for those with children.
I can see the benefits of increasing fertility, at least to maintain replacement level. But I struggle with punishing the childless.
You have contributed essentially $0 to your own retirement benefits. The systems are pay as you go, and so only future children can pay for your retirement. Every dollar of social security and medicare will therefore be freeloading, and this is the source of the fiscal cliff.
Even if there wasn't the issue of pay as you go, retirement benefits are basically a claim on future services provided for by other peoples children. Without those children there would be no services to purchase.
The fairest way to do this would be to increase payroll taxes on the childless and reduce them on breeders. Then in at least some sense you could say you contributed to the raising of the next generation of contributors.
I'd say public education is tricky because it's not really paid to parents but to the school system. Who's the recipient of the benefit? I don't think its hard to make the case its the education system and its stakeholders more then the parents or children. This was particularly apparent over the last few years.
Anyway, I think school vouchers would be a great way to give utility to parents and increase fertility without costing any additional money. Unfortunately, the childless are by and large leftists and oppose school vouchers. Many seem to view the public education system as a way to indoctrinate the children of others since they did not have their own. Obviously not all childless people feel this way, but it's a very common explanation given for opposition to vouchers which is statistically significant among the childless.
"I can see the benefits of increasing fertility, at least to maintain replacement level. But I struggle with punishing the childless."
By definition if the change is to be revenue neutral then the childless must pay more for the breeders to pay less.
Ah. Medicaid and Social Security. Two programs I pay into but expect to receive zero benefit from if/when I am eligible. Ideally, they are pay-as-you-go with current contributors paying previous contributors benefits. But that math no longer works (and is related to fewer children eventually contributing to the system).
My retirement accounts are funded by me, and have present values greater than expected payouts via government programs. I deferred current benefits for future ones. If you want to argue that constitutes burdening future generations, then any investment fits that criteria with a long enough time horizon.
I would be happy with you forgoing your SS/Medicare out of fairness, but I expect the uptake amongst the childless for that proposal will be close to 0%. Having them pay more in taxes now to give tax breaks to people having kids seems a lot more realistic of a solution.
I have little doubt that a smart person with no children has had enough money lying around to build up a 401k.
Are childless people investing in companies with higher ROI than the future contributions of their children to the economy? On net I'm highly skeptical. I suspect a lot of the money they save goes into additional consumption and zero-sum bidding on rival goods.
If they are investing in companies, those companies are going to need workers in the future. For the most part I'm proposing that smart successful people who are likely to have have smart successful kids get money for having kids. That seems pretty high ROI.
The average yearly tuition for private school is $12,350. It's probably fairer to say that there are a lot of private schools that are a bit lower than that and a few ritzy prep schools that are way higher than that. My county spends $22,000 per kid and the local private school costs $10,000 in tuition.
https://research.com/universities-colleges/average-cost-of-private-school-by-state#
Daycare requires a lower student:teacher ratio because they are young, it's really not that expensive to provide K-12 schooling. Public education used to spend 1/3 inflation adjusted compared what it does today, but it's a powerful lobbying force.
The US personal savings rate is 3.2%. The 90th - 99th percentile in household income only saves 12% of their income.
So I don't think it's going into savings and investment. I think it's going into housing, cars, restaurants, and vacations. That's what people brag about in these DINK videos isn't it.
Even so, doesn't this prove the point. People with children have much higher expenses so they need more income before they can start to save. When I come across additional income, I save it for my kids future.
I don't really understand your labor argument. It seems contradictory.
I encourage you to look at a breakdown of K-12 spending and decide for yourself what is driving it. When I've done so the answer I've come up with is "lots of fat".
Free ride? I've paid insane amounts of taxes for decades -- even before I was a citizen and so had no representation. I've received ZERO in unemployment, SS, Covid payments, etc. I'm now being forced to pay "back" $6000 in health insurance benefits that I didn't ask for and didn't receive with no recourse. My feelings about your description are not printable here.
Obviously I'm describing the fiscal contribution of two identical people other than the fact of one having children and one not. Wealthy childless contribute more than they take, and poor breeders probably take more than they contribute.
But wealthy breeders contribute more than wealthy childless. For they contribute not only their own surplus, but the surplus of their children as well.
Of course I speak only of taxes here. Wealthy childless are terminating genetic lines that generations worked to create. And their own wealth is in no small part a result of those genetic gifts.
If one had any sense of fairness, one would want to pay their fair share such that a childless could say "I paid my fair share and this is just a lifestyle choice, not shirking." But I can understand why one would prefer denial.
Having children is only one way of passing along future value. Why punish people on one dimension?
I prefer to continue my genetic heritage by not dying. If that works out, I can have children later when I can afford them and when I can focus on doing a good job raising them.
Accusing people of denial is not going to open them to your arguments.
Fairness would mean taxing more heavily people who have encouraged the growth of government and regulation.
I'd be willing to wave your income taxes if you win a Nobel prize or do something else with a genuine legacy.
But I'm guessing you're not some great man that absolutely needs to focus on his society changing work and can't have a family (BTW Elon Musk has like 11 kids and he's launching rockets into space, what's your excuse).
I'm guessing you're just some dude that likes extra disposable income and hopes someone else will have the kids to take care of you in old age and continue your society.
"I can have children later when I can afford them"
If we pay you to have kids you can afford to have them right now. This is a big part of the problem. People compete for rival goods like real estate and the like and "don't have kids" is like a cheat code to try to get one up on the battle for these positional goods. Everyone keeps spamming the cheat code in a Red Queen Race and we end up where we are.
No, I'm someone who is savings heavily for retirement, not depending on others.
Your concept of fairness is nonsense. Having children is only way of contributing. Children are also a consumption good which the childless subsidize.
If you were to propose cutting government spending and giving more of the savings to people with children, it would be less objectionable. Otherwise, it's just another excuse to extort more money for useless and socially destructive government spending. Fortunately, you don't make tax policy. If such a policy were enacted, many of us would leave the country.
"Having children is only way of contributing."
Another way of contributing is to pay taxes. But you don't seem to want to do either. Just have everyone else take on societal upkeep for you while you free ride.
I don't wish the government to have any more money. I would prefer it to have less. But to the extent the amount of government spending is to remain constant, I think the childless should pay more of the tax and breeders less.
"If such a policy were enacted, many of us would leave the country."
I think this is unlikely posturing. But if true I think you should be charged an exit tax because of all the resources and opportunities that were invested in you by the society. Once you've given back what was given to you then you are free to go, but since free riding is your modus vivendi this will probably remove your motivation.
"We could just build more housing"
I'm holding every other policy item constant.
For whatever amount of building we have, the childless will always have more income to outbid breeders with the same gross income without changes to the tax code.
In my own development we have gigantic houses in a good school district. Like 5,000+ sqft. A majority of them are owned by boomers with no children. I don't quite understand why one or two people need a 5,000 sqft house, but that's how it is. Many of them only live in their houses part time. Meanwhile, basically every single friend I have that didn't lock in their mortgage before 2022 can't buy a house, most of them are college grad professionals with good jobs. They have to rent apartments or tiny townhomes and they aren't building equity. They aren't keen to have a bunch of kids while living in a dinky apartment they pay several multiples what I do for a huge house.
Adding to aggravation of this is the fact that my wife and I tried to have a baby -- going through the expense and great emotional turmoil of fertility treatments -- but failed since my wife is significantly older than me and was past the point where it would work.
No this is bullshit, you don't get to take credit for your kids, they'll be taking credit for themselves. By that system, your dad already took credit for you, it's ridiculous. I guess I'm a wealthy nonbreeder bc my household pays over $100k a year in federal income tax. I've never gotten a tax credit or rebate and one of those Covid checks or any tax break in my life. At my firm, all partners equally share in the overhead to provide full insurance to all employees without employee contribution to premium. Family plan costs $30k a year, my plan costs $6k a year, yet I share equally to pay for all those people with 4 and 5 kids. I pay 5% of my income with no cap towards schools I don't use. I pay for Medicaid for the 55% of babies born to parents (or A parent, more likely) who can't afford insurance. And then people like me, when we die, rather than just leaving everything to our own kids will be endowing much larger pots to charity. This is utter nonsense. People act as if all their kids aren't also consuming and using massive resources.
Childless people are typically very risk averse, long range planners who are quite careful with money and leading nice quiet lives not bothering anyone. Leave us alone and stop trying to dream up ways to suck more resources from the system for your own little private dynasty.
In order to pay $100,000 in federal income tax you would need a pre-tax income of $400,000, assuming you didn't itemize at all.
Fertility tends to increase after household income reaches $300,000, and that is often with two incomes. So you're way past the level at which most people feel comfortable having lots of kids, you must be really committed to the lifestyle.
I don't know what charities you plan to donate too when you die, but most seem to be awful. I highly suggest donating it to getting smart people to have more kids. The ROI is higher than anything else you could do.
I don't support the public schools, and I note that the childless overwhelmingly vote Democrat and support the public schools. They even vote for school board elections! So I don't really credit the childless with funding public schools I don't support or value, if they stopped voting we might even get school choice.
I don't think people on Medicaid should be having kids and I don't support a child benefit that would go towards them. I think the child benefit should scale with income so people like yourself would actually get huge tax breaks if you decided carry on the genetic legacy bequeathed to you by thousands of generations.
Why do you assume children will contribute a surplus? Wouldn't a childless person have a more positive impact than a similar "breeder" with 10 negative impact kids? Why should the childless person subsidize this breeder's lifestyle?
"Why do you assume children will contribute a surplus?"
I'm assuming the child subsidies are tracked to provide greater subsidy to higher earners, per the original post that wishes to tie it to income taxes. High earners have good genes and their children will likely be high earners because it's heritable.
Obviously, I don't think we should pay ghetto mamas a bunch of money to have ten kids.
I met my wife at 40 years old and we married at 43, so children weren’t really an option. We’re wealthy (combined $450k/year), and we live in California, so we pay a significant share of our income to taxes due to our very progressive tax system here. The idea that we don’t “pay our fair share” because we’re “terminating genetic lines” that our ancestors “worked” (do you mean sex? Your poor spouse) to create is asinine. My wife and I very happily pay huge amounts of taxes each year and we rely very little, relatively, on government services—certainly far less than our neighbors with school-aged kids. We also save for retirement and will not rely on others to pay for us. So miss me with this stupid take. Anyone who describes working-class parents as “poor breeders” is clearly an idiot.
Most high earners manage to have kids. People who earn the same amount that you do and did manage to have kids have simply done more and should be paid for the expense of bringing high value children into the world.
Also, I wouldn't be to proud of being a high earner. If you're high IQ and don't have kids, that's like bare minimum expectation.
Waiting too long to get married and have kids is a common error people make with their lives. Obviously, you both could have made different choices to end up with a different outcome. If you prized waiting so much that's fine, but now you have to pay. Once the finances of the matter have been fairly squared society doesn't have to render an opinion on your choices.
I'm offering to take away the guilt of failing to have kids by giving you an opportunity play a role in the raising of kids that people like yourselves did have. You could choose to live in bitter denial over this rather then take a positive role, but I don't have much sympathy if you go that route.
What about people who adopt? They are not increasing the total children in the world but they are bearing the costs. If they adopt from outside the country they are increasing the population of the country.
Adoption is good though usually less good than breeding (the best reason to adopt would be if you couldn't have kids). Fertility these days is lower amongst those with above average genetics and kids put up for adoption are generally of lower quality.
As I'm sure you know, Hungary has a policy along these lines--in 2019 no income taxes for women with 4+ kids, in 2023 (iirc) they added no income taxes for women who have a kid by 30. As I read the popular press articles, it seemed to apply only to the womens' income (which would make it a lot less effective than Bryan's proposal).
I haven't seen any papers measuring the impact yet, but I'd like to.
For starters, is it just no income taxes for the women? What about their husbands?
Most women having 4+ kids want to be a SAHM, not work a demanding career. Or they at least want to take a break when the kids are young. Things like subsidized daycare or tax breaks (on the woman's income only) kind of miss the point.
Hungary's , TFR is declining just as much as the rest of the West. This doesn't work much as I wish it did.
Not "just as much". They stayed fairly steady while other countries around them dropped. https://twitter.com/lymanstoneky/status/1745171071840485382
That's fair, thank you for correction.
Looking at that chart, I can only assume Lyman was being sarcastic. Beating in level? wtf. As for trend, it may not be obvious at a glance but TFR figures are actually hard to interpret. For instance, in Hungary before 2011 maternal age at birth was growing rapidly and depressing measured TFR by ~30% (so-called momentum correction). Once this transient was over, Hungary's TFR recovered to the level of its neighbors such as Czechia (which Lyman curiously neglected to show on his chart). I.e. Orban's policies did not do much of anything except for PR, which is of course the whole point for a politician. https://twitter.com/CandideIII/status/1529023219654873088
How about your social security benefits depend on your number of kids and preretirement income? 0 gets you 1/3, 1 gets you half, 2 gets you the full amount, and you get a 10% bump upto six. If you can prove permanent infertility or disability before 40, you get the full amount.
Utter nonsense, smaller populations will help humanity win the battle against life threatening climate disaster and help save the other species we share the planet with by protecting their shrinking habitat.
Robots equipped with artificial general intelligence will wipe our aging asses and grow and prepare our food. Young people will have less competition for jobs so their wages will rise and with less demand for housing the cost of the existing housing stock will become more affordable. Nobel Prize winner Paul Krugman recently looked at low birth rate Japan and penned an amazingly optimistic report on its economic conditions. "In some ways, Japan, rather than being a cautionary tale, is a kind of role model - an example of how to manage difficult demography while remaining prosperous and socially stable.
"Saving for retirement" is another way of saying "forgoing consumption now so that I can have claims on future production". Which is a perfectly reasonable thing to do, but the future production still has to come from somewhere.
In the limit, consider a society where everyone saves for retirement but no one has kids. What happens when they retire? Effectively high inflation, as more and more saved-up claims on production (money) chase a smaller and smaller amount of actual production (goods and services).
So children who are being born now will support retirees tomorrow not financially (though they might do that too) but via actually producing the goods and services those retirees need/want.
Now of course you could replace "children" with "immigrants" for production purposes, and that might still work. That has other concerns, obviously.
If a country adopted this policy, I don't think it would last two decades. The moment some very rich and very prominent citizen of that country had their sixth child, controversy would ensue. Is it fair that such a rich person pays zero income taxes?
Also, when you say "because their current fertility is so low" you seem to imply that high-earners' fertility is lower than that of middle-class earners. That is not the case for most countries with low TFR. Fertility is lower for highly-educated women, but not for high-income women.
Fertility has a negative relationship with income until household income reaches something like 300k. This is the top 5% of households (higher if we talk about people in childbearing ages with kids). You can't populate the next generations smart fraction if you need to be in the 1% before you can buy more fertility.
Agreed. But that's not the point I was making. My point is, I think Bryan's proposal would be viable only for a short time before becoming too controversial.
People react to incentives. Fertility rates wpuld rise if this adopted. But do these tax adjustments constitute subsidies (in a sense) to those receiving them? Also, those tax adjustments discriminate against tax payers who are infertile and/or don't want to have children for whatever reason. The tax system is unfair to them that way. But I agree. There is no fertility / demographic problem. There's only social security system, tax system and pension system problem.
My understanding is that we have data on this and that long term incentives are nowhere near as effective as simple cash payments on birth.
As such, I tend to think the long term tax breaks are less about actually incentivizing behavior and more about moralizing. Just fucking give people cash for births!
The tax for having zero kids will likely just incentivize premarital child birth and no marriage at all.
In Poland, we have no income tax for both parents of 4+ children. I don't think that's very effective - with recent changes in income tax, the tax-free amount went way up, and larger families with one income, a SAHM and child benefits are pretty well off and pay little to no income tax anyway.
Another thing we have in Poland is free minimum pension for mothers of 4, which waives the requirement of 20 years of employment for women. This has way more impact on SAHMs who would either need to work or have no pension otherwise. I think it's more effective, though I have only anecdotal evidence: I have a SAHM of 3 in my family and she actually considered having a 4th child to get the free minimum pension.
Hi Bryan, I wrote a post responding to this where I do some back of the envelope calculations, but mostly where I try to outline why I think it's more efficient for tax incentives to kick in only once families get to the third baby. That said, I think your proposal would move us pretty close to replacement from current levels. Would love to know what you think:
https://www.allcatsarefemale.com/p/that-fertile-formula-is-inefficient?utm_source=profile&utm_medium=reader2
Applying these provisions to the taxes on MEN's income could be problematic. Doing so would HAVE to depend on some mother's certifying the man's/men's eligibility. Paternities outside of marriages (VERY common in Iceland, USA, etc.) could give rise to all manner of shenanigans. So would refusal to recognize such. A market in certifications would surely arise.
Elon Musk (11 children so far) will pay NO taxes, ever.
Yeah, franchise dads would be minting it
The U.S. population is currently over 330 million, and the global population is over 8 billion.
What are the target populations for the U.S. and the world?
If a government adopted such a policy, it'd get voted out of office the following election and the policy reversed. Few people would have more kids, because they could anticipate that outcome in advance (except some families that were on the margin of having one more child would do it to get the 1-4 years' worth of tax break).
If you assume the policy is somehow set in stone then the effect largely comes from how it impacts young people who have more leeway to make big changes to planned family size and expect to get the payout for a larger fraction of their lifetime income. So I'm going to ignore the 2-decade part of the question and just try to guesstimate the long run effect.
Doing a simple estimate using average per-quintile income and effective federal tax rate, and a base cost of raising a child that starts at $17k/year for the first one and goes down slowly for more, the only people for whom the math is a net savings is the 5th quintile, with the first child representing about 16k of savings, the rest being pretty close to zero (ie. the tax break is close to the expected spending).
So the biggest impact is converting upper income zero-children families to 1+ children families (about 15%-20% of couples are childless, and they're over-represented in the upper quintile, so maybe 5% of the population overall). So my best guess is a 0.05 to 0.125 increase in TFR from that demographic alone, another 0.15 from the remainder of the upper quintile, an effect 1/3 as strong on the next quintile, and 1/2 that on the middle quintile (bottom quintiles pay essentially no federal tax, so they're not incentivized).
That gets me to a TFR impact of between 0.3 and 0.4125, which would get the US to replacement or just slightly below it.
Correct, I think its impossible to solve the fertility crisis without a constitutional amendment that gave parents votes on behalf of they children. As it stands the median voter is either childless or an empty nester. The fiscal cliff is the inevitable result of olds being able (and quite willing) to vote while children (or their parents on their behalf) can't.
The vast majority of those old people have children; voting for the fiscal cliff is perfectly rational: generous benefits saves them money that they can pass on to their children. Parents aren’t more altruistic voters ‘because they have a stake in the future.’ Arguably they have a lower circle of concern precisely because they have kids. Do fertile regions like the Middle East seem well governed because everyone has a steak in the future there with all their progeny? Or does putting family above all else not lead to rampant corrruption?
The only way to actually make voting more rational would be to allow buying and selling votes.
By definition, the only way we can have a fiscal cliff is if old people didn't have enough children.
I'm not asking parents to be altruistic voters. I'm asking them to be selfish voters. The more selfish they are the more kids we will have, which is a good thing.
Your model is of an intergenerational conflict over wealth transfer, with one side out-muscling the other. If that were the case your solution would help.
However, polling shows even the very youngest generation doesn't want to cut social security benefits in any way shape or form even as they believe it will be bankrupt. (See https://www.pewresearch.org/social-trends/2019/03/21/retirement-social-security-and-long-term-care/ )
If you somehow limited the franchise to young people, social security benefit reductions would still be voted down 2-to-1. There's no way to re-weigh the votes by demographics that will give you the policy outcome you want.
I didn't say "young people" should have more of a vote.
I said "parents" should be able to vote on behalf of their children. Preferably married parents.
Parents, especially married parents, are much more right wing then non-parents and the young.
Status quo bias is huge in politics. Nobody wants to cut anything. But if "benefits for parents" and "benefits for olds" were both status quo benefits that came into conflict, who had votes would determine who won that conflict.
I understand that you were being more specific than "young people", it's just hard to get good data on exactly what married parents with children still in the house believe about social security spending. The effect would have to be drastic to work out the way you want. Merely turning the typical democrat into the typical republican isn't enough.
Just having kids isn't sufficient: women become *more* liberal on social welfare issues if they have children, no doubt because of the non-trivial single-mother contingent: https://www.cambridge.org/core/journals/politics-and-gender/article/abs/children-gap-on-social-welfare-and-the-politicization-of-american-parents-19842000/B60ED94CC8C776E5E8A0C4AB1D0B7CFD
If asked to choose between cutting benefits for sympathetic group 1, or for sympathetic group 2, an overwhelming majority of Americans will choose "Tax someone else"/"Borrow more money"/"Print more money" every time. The ability to actually force voters to choose between two ways to spend money, instead of going for both at once, would basically be a superpower for fiscal problems.
Right now "money for olds" benefits from status quo bias versus "money for kids". I'd like to put them on the same playing field. We never even really decided that "money for olds" is something we wanted. People just kept living longer.
Moreover, I take fiscal bankruptcy as a mathematical inevitably if we can't solve the dependency ratio. If the money is destined to be wasted on nursing homes (or something even worse) it would be better to spend it on children now. Many cultures have suffered bankruptcy (think Germany and Japan) and young people dug them out. They are all you have left when everything else is gone.
Robin Hanson did the math and if you really could get smart people to have more kids even debt financed child tax breaks make fiscal sense.
"Correct, I think its impossible to solve the fertility crisis..."
What's the "crisis"? (Is this an even worse crisis than the climate crisis?)
We have 330+ million people in the U.S. Would U.S. society collapse if there were 100 million less people 40+ years from now?
Robin runs down the arguement on his substack pretty well, you can go there for the long version.
Basically I think we will enter a demographic doom loop that causes our society to implode. The young will be enslaved to provide for the old, and in response to their enslavement they will themselves have fewer children. The dependency ratio will just get worse and worse.
Beyond that, there does seem to be a sense based on surveys that people desire more children but fail to achieve that desire. I believe this is because they feel caught in a Red Queen Race over rival goods and they are tempted to reduce their fertility to win that race. Then everyone does it and they all end up in the same place minus the kids they wanted to have. If you rebalance the incentive structure then people will stop playing defect/defect.
What about those who try to have children but cannot? Are there exemptions for them and if so how is that enforced?
Fertility struggles can be extremely anxiolytic and depressogenic, especially for the aspiring mother. The idea of trying and failing to conceive all year, then getting hit with a tax penalty at the end of it - well, it does seem breathtakingly cruel.
Ugh, by anxiolytic I obviously meant the opposite of that. Anxiogenic. Hate when I do that.
Everyone would get themselves declared exempt.
“Dear Sir/Madam, enclosed is your medical exmemption, comprehensive testing demonstrates that you are certifiably dysgenic.”
An actual practical application for human polygenic screening! Dig in, you can find squirrelly genes and psychiatric flaws in anyone soon *happy squee*