Parents Deserve a Bigger Tax Break
Posted at 11:37 a.m. on April 2, 2014
Matthew Klein argues that parents, as “the world’s most important investors,” deserve a bigger tax break.
“People who don’t work depend on those who do … Workers also pay the taxes that support the elderly in retirement. This is why parents tend to make everyone better off when they have children.”
Klein points out that the childless benefit at the expense of parents because they “can use the money they don’t spend in raising kids to pay for a comfortable retirement.”
The chart below, featuring two hypothetical couples with identical financial profiles, illustrates the gap in net wealth resulting from having children.
Klein’s proposal: A “larger tax child tax credit that would more than offset a broader increase in tax rates.
“The advantage of a tax credit is that it could be claimed by the poor.”
“Another option: Adjust the rates paid for payroll taxes, which go toward entitlements, according to the number of children you have.”