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August 09, 2010

Would Tax Breaks Lead to Higher Birth Rates?

Though I usually find Robert Samuelson's articles well thought out and well researched, I'm not sure that's why people have children:

Among the government's most interesting reports is one -- published by the Agriculture Department -- that estimates what parents spend on their children. The latest version finds, not surprisingly, that the costs are steep. For a middle-class husband-wife family (average pretax income in 2009: $76,250), spending per child is about $12,000 a year. Assuming modest annual inflation (2.8 percent), the report estimates that the family's spending on a child born in 2009 would total $286,050 by age 17. A two-child family would cost about $600,000. All these estimates may be understated because they do not include college costs.

A few questions and observations:

1. Do people spend more on their children because the cost of raising children has increased? Or because affluent societies have fewer children (on average) and most disposable income?

2. Does spending more on kids mean you're doing a better job of raising them? I happen to believe there's something to be said for teaching children the value of hard work. I bought my sons their first bicycle because they were too young to earn money but when they wanted to move up to a "grownup" bike, I told them they should work and save up for it.

Likewise, though paid for much of both sons' college educations, they were required to take their own loans and to earn their spending money and contribute towards their tuition.

Children work fewer hours now than previous generations and yet they have far more possessions. That seems like a perverse lesson in incentives to me. I've also noticed that those least able to afford large families seem more inclined to have them while those most able to afford large families delay childbirth and have small families.

Possibly related:

“From Washington to Wall Street,” Reuters columnist James Pethokoukis wrote on Thursday, “there are rumors that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth.”

Let's take this slowly: despite several government initiatives designed to make it possible to homeowners to keep homes they clearly can't afford, even folks who have the money are defaulting on their mortgages. This administration's answer to a problem largely created by too lenient lending policies seems to be ... wait for it ... to relax the rules even farther.

Yeah, that'll work. Discuss amongst your ownselves.

Posted by Cassandra at August 9, 2010 12:55 PM

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You know why they are doing this, don't you?

It's because they want to give inner city poor a voucher to move out to the suburbs. This way, it enlarges the Democrat vote and opens up rich property in the inner city to be taken over by gentrification and rich white Dems.


Posted by: Ymarsakar at August 9, 2010 01:35 PM

They need the poor to keep their homes. Because those homes are sitting dab smack in several middle to poor class neighborhoods. The Dems need them there.

For the 2010 and 2012 elections.

Posted by: Ymarsakar at August 9, 2010 01:36 PM

Typical redhead behavior, I actually think that spending less on my children means I'm doing a better job of raising them.

We bought The Girl her first bike (the teeny kind) and then her second (a regular kid-sized bike). After that, it was nothing but hand-me-downs and yard sale specials. The Boy bought the bike he's riding now for $3 (of his own money) at a yard sale. The Girl is happy riding a hand-me-down from a friend.

They now draw an allowance and buy their own toys (other than Christmas and their birthdays) and trinkets. And if they want clothes other than what I buy for them (we usually hit the local thrift stores once every other month or so) they buy their own too.

I've watched their spending habits change over the past few months as they've started to truly understand the value of a dollar and what it takes to earn that around here.


Posted by: HomefrontSix at August 9, 2010 02:34 PM

Get em while they are young, HFSix, that's the trick.

Posted by: Ymarsakar at August 9, 2010 03:58 PM

The biggest single factor increasing the cost of raising children is the dysfunctional state of so many public schools. This often requires parents to either incur direct expenses (send the kids to private school) or indirect expenses (move into a neighborhood with a better public school system.) These education-driven expenses during the K-12 years are followed by high spending at the *college* level, driven by the irresponsibility and greed of all too many university administrators.

At the same time, many couples at family-starting age have their own debt overhang from their own (often over-priced) college educations.

The solution is *not* more tax incentives for having kids; the solution is to break the back of the K-12 education cartel and to do something serious about the higher-education bubble.

Posted by: david foster at August 9, 2010 05:55 PM

"Something serious" starts and ends with accreditation. If you can license me to accredit you as a bachelor of arts in history or philosophy, I'll do it for half what Harvard asks. :) And hey, you'll be my only student, and you might learn some history along the way.

Posted by: Grim at August 10, 2010 01:28 AM

I raised two girls on enlisted salary, with my wife also working most times, BUT:

- We bought our first home, using VA guarantee, NOT Freddie or Fannie - we still own it, and G_d help us, we hope to retire there someday...

- The military helped me finish college, with tuition assitance - lots of nights and weekends (and mom & pop helping with testbooks, mostly used) which has helped me get the job I now have...

- My wife quit her job just when my girls were hitting their teenage years, keeping involved with them, getting them into things like Girl Scouts and dance classes, but really just to be there when they needed her...

- We just bought a second home, again using VA, but WE WAITED until after the bubble burst to buy, although we've wanted to buy for at least 8 yrs...

- My eldest now has 2 kids of her own, and she's just now restarting college, after her husband finished HIS degree...

- Our youngest is still in school, and we're helping her with the tuition and books, but she also moved to live near her sister to help her with the kids...

If you don't teach your kids to curb their immediate gratification impulses, who will?

Posted by: cas at August 10, 2010 09:10 AM

It was really difficult to not give in to instant gratification for the CLUs. However, our daughter has a part time job (she is 12) babysitting. Not her brother. Her idea of babysitting him is to bury him up to his neck...you get the idea.


Anyway, all of the lads have worked for others in the community and been paid. The eldest CLU is filling out applications now, as the summer job rush is over and all the students are back in school. We have hopes, we does...

Posted by: Cricket at August 10, 2010 01:05 PM

I agree with cas and am clapping for HF6.

It's really hard for me to not do the "but they need it for a better adulthood!" bit. I want my children to succeed. And when it comes to certain activities, reaching for that success has become a lot more expensive for us.

My kids don't have a lot of stuff - we're consistently under our moving weight by a fairly sizable amount. But they do have a lot of activities. And I actually need to rephrase that, as well. My kids have scouting, ONE sport, and CCD. However, because I have limited them to one sport each, they have all begun to seriously excel that that sport. They work really hard, and now that they are noticing how much their hard work is setting them apart from the majority of their peers in their sports they work even harder.

A lot of the parents I know have ADHD when it comes to "experiences" for their kids. The kids do soccer, football, basketball, gymnastics, a dance class or two, drama, and so on and so forth. That gets truly expensive, and I have trouble believing it's worth it. Sure, the kid tries lots of things. But they never get really GOOD at any of those things. They never learn how to set your nose to the grindstone and keep working even though you're sick of doing sit ups.

I really noticed this as a teacher - kids had no follow through in addition to not understanding the costs involved with what they wanted. As a parent, I get how frustrating that will be. A lot of the reward in parenting is seeing your hard work pay off and your kids succeed (varying definitions of success apply here). And if parenting is all frustration, where's the incentive to have more kids?

Taxes, schmackses. In the heat of the moment (we were never quite able to get that planning thing down) we weren't going over our 1040 and wondering if the rates were conducive to procreation.

Posted by: airforcewife at August 10, 2010 01:10 PM

Mean Mommy! And you'd probably make your kids pay their mortgages, too.

Posted by: Texan99 at August 10, 2010 03:57 PM