It’s not a good idea to invoke Milton Friedman against the Wall Street Journal op-ed pages. A tax credit is, in fact, a transfer payment — the fact that it is accomplished through tax filing rather than some separate paper-shuffling bureaucratic process seems to be a point in its favor. Moreover, the credit is income contingent — another way of saying this is that it is “means tested.”

These are all well and good but the WSJ is on record as having labeled those who are too poor to owe any net federal income tax as “lucky duckies” and insists that everyone — even a minimum-wage earner caring for a family — should owe income tax to the federal government on top of the payroll taxes they already pay.

The fact that this may mean a family cannot buy nutritious food, stay in a safe neighborhood, provide adequate health care for their children or keep their car in good enough shape to get to work seems to be outside the realm of WSJ’s concern. By contrast, Friedman supported a “negative income tax” which guaranteed a minimum standard of living.

It seems to be that tax breaks for people who have children are more similar to tax deductions for medical expenses than they are for tax deductions for charitable giving. Making charitable giving tax deductible apparently does encourage people to give to charity more than they otherwise might.

Well now that you mention it, the same marignal problem exists for tax deductions for charity. Say the deducation causes 10% more giving. That’s great, but you don’t know whose donation was motivated by the deducation, as a result the donation has to go to *all* the donations which means that if your purpose was to motivate additional giving, a lot of the deduction gets ‘wasted’ on rewarding donations that would have happened anyway.

Neil

And B is problematic. According to Catholic social thought, the family is irreplaceable and unique and the very precondition for society and the state because it is the first form of communion between persons.

If the family is so irreplaceable and so uniue then it must have great value. If the formation of a family generates great value, then one should ask who gets to realize and enjoy that value. While, of course, society gets a lot, but presumably the family gets a lot too. If the family itself is getting a lot of value out of itself, the gov’t doesn’t need to worry about ‘providing incentives’ in this area.

I’m not saying by this that we shouldn’t have the policy, but I think it is ‘ok’ to assert a economically neutral stance.

A. The government should not encourage procreation through the tax code because the tax code is not an appropriate instrument – any child credit will be too small to be effective and will likely lead to inefficiency and fraud.

B. The government should not encourage procreation through the tax code because the government “ought not meddle in certain issues” – just as the government should stay out of religious controversies because of its limited competence, it should neither encourage nor discourage people to have more children.

A leaves open the possibility of finding an appropriate instrument, such as transfer payments. B does not.

Practically, A might have the same result as B, since it is unlikely that Reno will identify or invent an appropriate instrument. But A is still a more acceptable argument, which might mean that – if Miller is a bit cynical – it is meant to grease the path to B.

And B is problematic. According to Catholic social thought, the family is irreplaceable and unique and the very precondition for society and the state because it is the first form of communion between persons. If the government cannot recognize this, and, consequently, should not intentionally create conditions for the flourishing of families, it might very well regard any form of communion as outside of its competence. And, thus, the idea of the common good – the primary goal of society – cannot exist, because the government will not grasp that we are meant to be “with” and “for” others.

The government will act according to a rather reductive picture of human beings as mere individuals, perhaps consumers. Anything else is “religious.”

I apologize if I’ve misread Professor Miller.

Certain tax deductions, like those for charitable giving, are intended to be incentives, but others, like deductions for medical expenses or for dependents, are meant to be breaks.

Some may not like a progressive tax system, but certainly everyone can agree that a regressive tax system is unfair. And a tax system did not take into account the ability of lower-income families with children (and medical expenses) would be regressive.

“For many families dealing with major economic problems like the total loss of income, the credit will either be nearly meaningless or unavailable to them because they don’t earn enough to effectively claim it. ”

So the fact that there are a heck of a lot of families in between these two extremes doesn’t get considered? People who get to get those regular dental visits and have a few extra school clothes? That’s a handy way to show that the idea should be dismissed.

I’m not so much arguing in favor of the proposal, but excluding the people it would actually benefit in a useful way from your analysis, in order to argue that there’s no one it would benefit in a useful way, isn’t convincing.

I’d find it rather disturbing if it did. I’m not looking forward to seeing the couple that wasn’t going to have a kid but then decided to do so for a tax benefit that amounts to less than the cost of a pack of cigarettes a day.

A few other points I’ll note:

1. When Gore was running against Bush, he proposed expanded child tax credits and was bashed by the right for offering ‘cuts only if you jump through gov’t's hoops’….interesting how that’s forgotten now.

2. The proposal may make sense as a way of helping out families. But then looking at the marginal and opportunity costs makes a lot of sense. For many families who are quite comfortable, gov’t is going to essentially spend $2K to provide more spending for fast food outings and Xbox games. For many families dealing with major economic problems like the total loss of income, the credit will either be nearly meaningless or unavailable to them because they don’t earn enough to effectively claim it.

Consider an alternate policy; gov’t will gurantee that no matter what no family with either a pregnant woman or kids whose income is less than $100K will be without health coverage. Such a policy probably would encourage some to have kids. Probably encourage some to consider adopting children with health issues. Probably would be a great relief to those contemplating job moves or dealing with prolonged unemployment. And will probably cost less than $3K per family per kid.