Should we phase out the child dependency deduction?

[TV and credit cards]

I am unaware of strong empirical evidence that the child deduction induces people to have children (or more children). So tinkering or eliminating it will probably have little effect on the number of children born in the USA.

I am also unaware that there "too many" or "enough" people in the USA. On what basis is that claim being made?

Agreed. To what extent do people decide to have or not have a child based on tax advantage or to adopt for that matter? It might be a nice benefit but I do not think it carries any weight in the initial decision making process.
I would be somewhat concerned with is unscrupulous people adopting only to make money and the higher the monetary incentive, the more cautious the state should be. I do not agree with placing a monetary incentive on adoption. Perhaps nonmonetary incentives like quality health coverage or guaranteed four years of higher education for the child would be good though.

 

[ronburgundy]

I am unaware of strong empirical evidence that the child deduction induces people to have children (or more children). So tinkering or eliminating it will probably have little effect on the number of children born in the USA.

I am also unaware that there "too many" or "enough" people in the USA. On what basis is that claim being made?

Agreed. To what extent do people decide to have or not have a child based on tax advantage or to adopt for that matter? It might be a nice benefit but I do not think it carries any weight in the initial decision making process.

This is a naive and psychologically ungrounded view of decision making. Having kids is an expense. People consider costs when making decisions, and there is nothing magical about children that prohibits costs from entering the decision making process. Plenty of people are somewhat conflicted and uncertain about having a kid, whether it is their first or fourth. That means many times the decision to go ahead is often only slightly favored, which means added costs would push it back in the other direction. For many people, the shift in pros-cons would not be enough to change the decision, for some it would. For the first kid, the desire to be a parent will be the strongest factor and $ will matter less. But with each kid, that parenting desire is already somewhat met, so it influences the decision for another kid less and $ becomes a more influential consideration.

 

[ksen]

Agreed. To what extent do people decide to have or not have a child based on tax advantage or to adopt for that matter? It might be a nice benefit but I do not think it carries any weight in the initial decision making process.

This is a naive and psychologically ungrounded view of decision making. Having kids is an expense. People consider costs when making decisions, and there is nothing magical about children that prohibits costs from entering the decision making process. Plenty of people are somewhat conflicted and uncertain about having a kid, whether it is their first or fourth. That means many times the decision to go ahead is often only slightly favored, which means added costs would push it back in the other direction. For many people, the shift in pros-cons would not be enough to change the decision, for some it would. For the first kid, the desire to be a parent will be the strongest factor and $ will matter less. But with each kid, that parenting desire is already somewhat met, so it influences the decision for another kid less and $ becomes a more influential consideration.

lol, you must not have kids because the deduction factors in about 0% of the decision if there's even a decision at all since many, if not most, pregnancies are unplanned.

I have three kids. Zero of them were conceived with the notion of collecting that sweet $500/child tax deduction. Although the timing of the birth of the third one was made in order to get him out in time to get the deduction for the current tax year instead of waiting a couple of days and getting pushed into a new tax year.

 

[Toni]

Having strong direct evidence would require a controlled experiment in which random people are assigned to either get or not get tax credits. Its an impossible type of study, so not a reasonable expectation. What evidence we have is indirect, but there is a mountain of it and it all points to tax credits incentive's having kids, and thus making the choice more likely, and thus increasing the number of births.
Tax breaks means a large reduction in the costs of having a kid. The only way that tax breaks would not impact births is if we assume that there are zero people who give any consideration at all to cost and financial issues when deciding to have a kid, how many, get an abortion, etc.. Virtually every relevant piece of info from behavioral sciences predicts that people would and do give financial issues some consideration in those situations.

I am also unaware that there "too many" or "enough" people in the USA. On what basis is that claim being made?

Yeah, this is the wrong claim. The real issue is that every single child increases the use of public resources and increases all problems caused by human consumption. Thus, every child increases the total tax burden that must be met to supply those resources, address those problems, etc.. If the people who have the kid don't pay that extra amount, then everyone else must. If they actually pay less than before they had a kid, as they do with tax breaks, then everyone else is paying all that much more for each kid other people choose to have.

Well, one could look at the trends in family size and compare with the amount of tax deductions and credits available to parents and see if there is any correlation.

 

[TV and credit cards]

Agreed. To what extent do people decide to have or not have a child based on tax advantage or to adopt for that matter? It might be a nice benefit but I do not think it carries any weight in the initial decision making process.

This is a naive and psychologically ungrounded view of decision making. Having kids is an expense. People consider costs when making decisions, and there is nothing magical about children that prohibits costs from entering the decision making process. Plenty of people are somewhat conflicted and uncertain about having a kid, whether it is their first or fourth. That means many times the decision to go ahead is often only slightly favored, which means added costs would push it back in the other direction. For many people, the shift in pros-cons would not be enough to change the decision, for some it would. For the first kid, the desire to be a parent will be the strongest factor and $ will matter less. But with each kid, that parenting desire is already somewhat met, so it influences the decision for another kid less and $ becomes a more influential consideration.

Of course overall cost is a consideration, but I said tax advantage.

 

[laughing dog]

This is a naive and psychologically ungrounded view of decision making. Having kids is an expense. People consider costs when making decisions, and there is nothing magical about children that prohibits costs from entering the decision making process. Plenty of people are somewhat conflicted and uncertain about having a kid, whether it is their first or fourth. That means many times the decision to go ahead is often only slightly favored, which means added costs would push it back in the other direction. For many people, the shift in pros-cons would not be enough to change the decision, for some it would. For the first kid, the desire to be a parent will be the strongest factor and $ will matter less. But with each kid, that parenting desire is already somewhat met, so it influences the decision for another kid less and $ becomes a more influential consideration.

Do you have any actual empirical evidence that extends this "psychologically grounded view" to dependent deductions?

 

[AthenaAwakened]

Having strong direct evidence would require a controlled experiment in which random people are assigned to either get or not get tax credits. Its an impossible type of study, so not a reasonable expectation. What evidence we have is indirect, but there is a mountain of it and it all points to tax credits incentive's having kids, and thus making the choice more likely, and thus increasing the number of births.
Tax breaks means a large reduction in the costs of having a kid. The only way that tax breaks would not impact births is if we assume that there are zero people who give any consideration at all to cost and financial issues when deciding to have a kid, how many, get an abortion, etc.. Virtually every relevant piece of info from behavioral sciences predicts that people would and do give financial issues some consideration in those situations.

I am also unaware that there "too many" or "enough" people in the USA. On what basis is that claim being made?

Yeah, this is the wrong claim. The real issue is that every single child increases the use of public resources and increases all problems caused by human consumption. Thus, every child increases the total tax burden that must be met to supply those resources, address those problems, etc.. If the people who have the kid don't pay that extra amount, then everyone else must. If they actually pay less than before they had a kid, as they do with tax breaks, then everyone else is paying all that much more for each kid other people choose to have.

Just how easy do you think carrying and birthing a child is? How much do you think it cost to raise a child? How much trouble and heart ache is involved? Do you really think people are so greedy for a few dollars ONCE a year that they will be so snake fascinated by the great wealth promised that they will decide to have a baby for that sweet, sweet deduction money?

 

[laughing dog]

Having strong direct evidence would require a controlled experiment in which random people are assigned to either get or not get tax credits. Its an impossible type of study, so not a reasonable expectation.

That is not the only method. Economists have been trying for years to tease out these effects and with little success.

What evidence we have is indirect, but there is a mountain of it and it all points to tax credits incentive's having kids, and thus making the choice more likely, and thus increasing the number of births.

If there really is mountains of indirect evidence that "to tax credits incentive's having kids, and thus making the choice more likely, and thus increasing the number of births", you ought to be able to produce some it.

Tax breaks means a large reduction in the costs of having a kid.

Not in the USA.

The only way that tax breaks would not impact births is if we assume that there are zero people who give any consideration at all to cost and financial issues when deciding to have a kid, how many, get an abortion, etc.. Virtually every relevant piece of info from behavioral sciences predicts that people would and do give financial issues some consideration in those situations.

That is not the only way. What if people do not think the tax deduction is enough to alter a decision?

Yeah, this is the wrong claim. The real issue is that every single child increases the use of public resources and increases all problems caused by human consumption. Thus, every child increases the total tax burden that must be met to supply those resources, address those problems, etc.. If the people who have the kid don't pay that extra amount, then everyone else must. If they actually pay less than before they had a kid, as they do with tax breaks, then everyone else is paying all that much more for each kid other people choose to have.

That is rather economically naive analysis. Children are not simply "consumption goods" for the parents, but "investment goods" for society. Moreover, there spillover effects for society in having educated citizens. All of that suggests that parents ought not to be expected to pay for all of the resources.

 

[Jimmy Higgins]

What evidence we have is indirect, but there is a mountain of it and it all points to tax credits incentive's having kids, and thus making the choice more likely, and thus increasing the number of births.

You forgot to cite this mountain of evidence.

Tax breaks means a large reduction in the costs of having a kid.

Well yeah, if you don't have health insurance and feed them sparingly. Oh, and they don't go to college.

The only way that tax breaks would not impact births is if we assume that there are zero people who give any consideration at all to cost and financial issues when deciding to have a kid, how many, get an abortion, etc.. Virtually every relevant piece of info from behavioral sciences predicts that people would and do give financial issues some consideration in those situations.

Yeah, and the tax benefits aren't all that great, relative to what you seem to be suggesting.

 

[AthenaAwakened]

ronburgundy,

You do know how tax deductions work, right?

 

[Loren Pechtel]

I do agree there's no social policy reason for it anymore. However, there is still the basic idea of the tax code that we don't tax the basic costs of living.

But costs of living do not increase linearly with the number of children. I also do not think it's a good idea to encourage very large, Duggeresque, families. So reducing the amount after the second child and stopping it altogether at some point (say after the 5th) would make a lot of sense.

You didn't quote my alternative approach that addresses this.

 

[Derec]

You didn't quote my alternative approach that addresses this.

You are right, and that's an interesting idea. However, how would you deal with multiple filers per household (adult children, roommates etc.)?

 

[Loren Pechtel]

You didn't quote my alternative approach that addresses this.

You are right, and that's an interesting idea. However, how would you deal with multiple filers per household (adult children, roommates etc.)?

I would treat every tax return as a household no matter what the actual living situation.