Child-based tax rates?
Slate has a provocative article about whether people without children should face higher marginal tax rates than people on the same income level who do have kids:
By shifting the tax burden from parents to nonparents, we will help give America’s children a better start in life, and we will help correct a simple injustice. We all benefit from the work of parents. Each new generation reinvigorates our society with its youthful vim and vigor. As my childless friends and I grow crankier and more decrepit, a steady stream of barely postpubescent brainiacs writes catchy tunes and invents breakthrough technologies that keep us entertained and make us more productive. The willingness of parents to bear and nurture children saves us from becoming an economically moribund nation of hateful curmudgeons. The least we can do is offer them a bigger tax break.
I think this one is hard. First, we already offer a income tax break to people on modest incomes with children, by way of Working for Families credits, as compared to people on similar incomes with no kids. But there is no equivalent tax break for people on higher incomes with kids. And no break on consumption taxes, either.
Second, we already help all children, and by extension their parents, through things like subsidised health care and public schools. Of course, parents pay into that tax pool, too.
Third, however, non-parents do get to free ride off the efforts of parents as they all get older, because it is the parents’ work in raising the kids (over and above the government’s work through schools etc) that drives the future economic growth and income, which in turn funds much of the non-parents’ retirement lifestyle. That lifetime benefit to non-parents is absolutely huge.
I’m just musing here, but perhaps one way to achieve parent vs non-parent equity is to make three big changes to KiwiSaver:
Make it universal, asLabour and others on the left suggest
Hike up the contributions rates to near Australian levels, to increase overall savings
Significiantly expand the list of items people can pay for in a tax-advantaged way from their KiwiSaver accounts to include children’s furniture, education costs, child healthcare costs, etc.
That way savings go up, non-parents fund a greater proportion of their own retirements, and parents get a tax break on much needed expenditures for their kids.