America Doesn't Have a Parent Problem, It Has a Middle Class Problem

Is America stiffing its parents?

Robert Samuelson writes that the government isn't doing enough to offset the growing cost of raising a child. Worse, if we don't do more soon, parents will decide to stop having children altogether, and the population drop-off will lead to economic decline.

First, let's look where Samuelson is right. Population stagnation is a problem, and it's one reason the Untied States is blessed with a vibrant immigrant population that should be the envy of Europe, rather than a problem for conservatives to fix with harsh anti-immigration laws.

But the decision to have a child isn't determined exclusively by tax rates. Higher rates of female education typically reduces fertility. As Bryan Caplan explains, "If you raise women's education, you raise their potential income; and as you raise their potential income, you raise the cost of fertility."

What's more, the federal government does promote having children quite a bit, with personal exemptions, a child tax credit (which doubled to $1,000 in 2001), a child and dependent care tax credit, incentives tied into the Earned Income Tax Credit, plus thousands of dollars families can set aside for child care and education. The full tax benefit of children varies greatly with income and number of young 'uns, but total deductions and refundable credits can easily pass $10,000 a year.

There isn't really a parent trap. There is a middle class trap, as middle-income wages aren't catching up to middle-income spending on health care, education, and essentials. Samuelson writes that "parents ought to be shielded from the steepest increases." Really? All of them? If you shield the super-majority of the country from bearing responsibility for paying for the government, you're going to get ... oh wait, that's what we have already.

If we want to repair the asymmetric relationship between too many senior services and not enough middle-age tax revenue, let's think about reforming the way we tax Americans' earnings and pay for old folks' health care. Leave the children out of it.