Treating Parents Fairly
The challenges involved in balancing work and family lead to some of the most difficult decisions any family faces. Decades of "women's empowerment," the rise of the working mother, and the economic pressures of modern family life have forced families to make difficult compromises. The implications of those compromises for children have led to highly controversial and emotionally charged debates that make all parents — regardless of their work and child-care choices — question whether they've done the right thing.
Most Americans have never really made their peace with the idea of full-time working motherhood. Pew recently found that 60% of Americans say children are better off with a parent at home, while 35% say that kids are just as well off either way. Another survey conducted last year gave respondents the option of a mother who works part-time, and, given this option, 42% said part-time work was best while another third opted for staying at home. Only 16% of respondents told Pew that it's best for children if mothers work full-time.
Likely in part because of these beliefs (in addition to a multitude of other factors), more mothers have been choosing to stay at home in recent years. According to a recent Pew report, the percentage of mothers who stay at home with their children (a statistic that includes non-working single mothers) fell from 49% in the late 1960s to a low of 23% in 1999, but then rose to 29% by 2012. A more traditional measure of stay-at-home motherhood — the proportion of all mothers who are married, do not work, and have working husbands — has risen a bit, too, from about 17% in the mid-1990s to 20% in the early 2000s, with some minor fluctuations thereafter, indicating that the proportion of stay-at-home parents has roughly stabilized for now. (Stay-at-home fathers are becoming more common as well, though they remain a small fraction of all stay-at-home parents.)
Contrary to stereotype, families with stay-at-home parents are generally not unusually wealthy, nor are they immune to financial pressures. In fact, many parents stay at home precisely because they are responding to the financial pressures of parenthood. The cost of child care has skyrocketed; the average cost of care for one child is more than the cost of college tuition in many states. And the recent recession has probably played a role as well: It is likely that more mothers would be employed outside the home if the weak economy had not forced many of them out of the labor market.
The stabilization of the proportion of mothers who stay at home, the persistence of the dramatic increase in working motherhood that occurred in the 1970s, '80s, and '90s, and Americans' continued uneasiness with full-time working motherhood all have implications both for generations of children and for the economy. And given the stakes and the complexity of the problem, it is tempting for many to look for guidance from experts. But because there are so many factors to consider, social science has not reached a consensus about what is best for children.
The lack of consensus, however, has not deterred policymakers from attempting to help parents by passing "family friendly" legislation. Unfortunately, and likely in large part because there is no social or scholarly consensus on which to base such policies, we have a host of government programs that work at cross purposes, prodding women into the workforce while at the same time making it difficult for mothers to work outside the home.
These contradictory policy pressures only add to the complexity and difficulty involved in balancing work and parenthood. Parenting choices come with costs and benefits that vary dramatically from family to family, so parents themselves are almost always better equipped than the government to evaluate these tradeoffs. Policymakers should use public policy to give parents more choices, rather than pressure them into one choice or another. They should ensure that our tax system is treating all parents fairly and that government policy remains as unbiased as possible.
A few key reforms — some simple and commonsensical, others complex and controversial — could help address these problems. But because any government tax or benefit inevitably incentivizes some behaviors and discourages others, any discussion of family-friendly policy reform must begin by understanding how families make difficult choices about work and parenting.
THE SCIENCE OF PARENTING
Both in the media and in the academic literature, complex debates about child care and work are often reduced to a stark, simple question: Is daycare good or bad for kids? Given parents' emotional investment in the subject matter — and their defensiveness about their choices in light of the often bitter debate — much of the literature is highly charged.
In our data-driven policy environment, the most obvious course of action is to look to social science for answers. But truly controlled experiments are impossible in this arena, and there is no easy way to gather the kind of information it would take to yield clear answers. Researchers try to follow groups of children as they grow, observing their families' care arrangements, demographic characteristics, academic and mental-health outcomes, and many other factors. They then attempt to statistically control for all the confounding variables to isolate the effects of different forms of child care.
Several studies about parenting in the United States — particularly the government's National Institute of Child Health and Human Development Study of Early Child Care and Youth Development, or NICHD SECCYD — have converged on two basic findings: Daycare might increase behavioral problems, especially if it's low-quality (as measured by adult-to-child ratios and other factors), and it also might increase academic performance, especially if it's high-quality. Some studies show these effects fading as children age; others, including the SECCYD, continue to find differences as late as children's teen years. Whether long term or short term, however, all the measured effects are quite small.
But such studies can never really overcome the profound methodological challenges inherent in the subject matter: There is virtually no way to account for, separate, and control for every variable in something as complicated as family life. It is very likely that families that choose different child-care arrangements are different in other ways, too. For example, a woman's going to work will not simply move her child into a different form of care; it will also increase her household's income and affect the quantity and quality of the parenting that occurs at home, along with many other aspects of family life.
Even if researchers account for these factors, controlling for income and parenting quality presents its own challenges. Income means different things in different households. For example, a couple that earns $35,000 apiece and sends the children to daycare will not have the same disposable income as a couple in which one person earns $70,000 while the other stays home and takes care of the children for free. Evaluating and controlling for parenting quality is even more complicated: As a variable, parenting is typically measured by having an observer grade the interactions between a mother and her child. In the SECCYD study, for instance, "parenting" was found to be more important than child-care arrangements, though it is not clear to what extent the methodology measures the causal effects of good and bad child-rearing techniques and to what extent it merely evaluates the personalities of mothers and their children.
The field of behavioral genetics attempts to sidestep these methodological problems, which are inherent in observation-based research. It looks at twins and other siblings (especially adopted siblings) to determine the extent to which outcomes can be attributed to factors like genes and home environment. Decades' worth of research in this area has led to skepticism about how much parenting really matters for children's life outcomes. As Judith Rich Harris famously noted in her 1998 book, The Nurture Assumption, whether the subject is personality, IQ, grades, or income, these studies show that sharing genes makes children similar to one another, but sharing the same house (which includes not only the same parents but also similar child-care arrangements) does not have very much of an effect.
Another scattered collection of studies takes a third approach that attempts to tease out the ways in which different situations, and different children, may require different courses of action. For example, one study of kindergarten-aged twins found that genes have a stronger influence on whether children exhibit "externalizing" behavior — bullying, aggression, and the like — when the children have attended preschool. As the authors note, genes tend to be more powerful when children can choose for themselves how to behave, which peers to consort with, and so on — conditions that are far more likely to be present in a child-care facility or preschool than in a child's home. This would suggest that the bad effects of daycare will be more evident in kids who are predisposed to misbehave and who attend lower-quality daycares that give kids free rein to act as they please. There is also evidence of trouble at the opposite end of the spectrum of psychological problems, in children who are particularly socially anxious. Studies show that some children exhibit "internalizing" behaviors and experience a spike in stress hormones when they are placed in daycare, especially if the facility doesn't provide a lot of attention or support.
Daycare outcomes therefore depend somewhat on the particular child, based on these findings; other studies indicate that daycare's impact also depends upon characteristics of the parents, including their income. The SECCYD data suggest that children benefit academically from daycare no matter how much their parents make, but other research indicates these benefits are especially evident in children from poor families. In the same vein, some scholars from the Brookings Institution have recently drawn attention to the "parenting gap" between the rich and poor, especially poor parents' failure to spend time talking to their kids. Researchers blame this parenting gap for disparities in child outcomes. They suggest various remedies, ranging from government-funded home visits to teach poor mothers and fathers better parenting skills, to programs that take on the role of teaching poor children the values they may not learn at home. Though the government preschool program Head Start has failed to produce many lasting effects, some smaller, much more expensive efforts seem to have achieved results, and it is almost certain that daycare would be better than some home environments.
In short, it seems clear, from both research and common sense, that good homes are better than bad daycares and vice versa, and that, if quality is held constant, some kids will fare better in one setting than in the other. Not all stay-at-home mothers carefully supervise their kids and teach them important skills to get them ready for school; likewise, not all daycare centers take their roles in child development and academic preparation seriously (the NICHD found that fewer than 10% of child-care operations provide "very high quality" care). And not every child will thrive when tossed into a group of peers.
For parents struggling to make the best choices for their children, none of these bodies of research is particularly helpful because, as with much social-science research, researchers must think in broad strokes. In trying to answer large-scope questions — Is daycare harmful? Do kids who grow up in the same home have the same outcomes? — this research can offer only generalized answers about overarching effects that may apply in many different situations. While generalized answers make these studies less useful for particular parents, generalizations are precisely what make social science so attractive to policymakers, who look for solutions that will benefit the most people.
But the same shortcomings that prevent these studies from producing results that are helpful to parents also prevent policymakers from being able to use the studies to design programs and tax policies that help more than they harm. In trying to help, despite their best intentions, policymakers have succeeded only in creating a tangled mess of programs with contradictory incentives, all of which make parenting choices even more difficult — especially since work and child-care decisions must also take economics into account.
Just as every family has different child-care needs, the economic tradeoffs of work vary from family to family as well. When a second parent joins the workforce, it means new bills for daycare, higher transportation costs, and usually an increased reliance on conveniences like restaurant meals. Marginal tax rates are inflated for a secondary earner, too, both because the couple can enter a higher tax bracket and because government benefits are withdrawn as the couple earns more. For some families, adding a second earner can actually mean less disposable income. And while better outcomes for children are often linked to higher family income, there is some evidence that increasing income doesn't help a child's academic performance much once his family is out of poverty. On the other hand, that extra money can go to pay for better daycare, private schools, a college savings account, a house in a better neighborhood with better-behaved peers, and so on.
The list of tradeoffs grows even longer when the well-being of parents is taken into account. Tradeoffs to be considered include stress (staying at home increases leisure time and working can be difficult and tiring, but screaming kids and diapers are no picnic either), hygiene (more housework gets done when a parent stays at home), role modeling (stay-at-home parents spend more time with their kids, but many mothers want to demonstrate female empowerment for their daughters), the rewards of paid work, the mental-health benefits of spending time among fellow adults, the simple joys of bonding with a child, the peace of mind to be had by supervising one's own kids, and many others. These things are important too, after all.
Precisely because there are so many variables to take into account, many policymakers feel that government should try to help. For example, if studies show that high-quality daycare boosts academic achievement without letting loose bad behavior, and if far too many kids today are stuck in substandard facilities, perhaps the government should fund high-quality daycare for everyone, as some Scandinavian countries try to do. Other advocates of government involvement suggest employer-related policies that would, in deference to the disproportionate child-rearing burden that women shoulder, mandate extensive paid leave for mothers of newborns so they don't risk losing their jobs when they take time off, and also require employers to be "flexible" when it comes to mothers' working hours. Or, if daycare isn't particularly bad for kids, perhaps we should drive as many mothers into the workforce as possible to increase economic output and achieve proportional gender representation in the workplace.
Social science plays a large role in these policy arguments. For example, those who advocate government provision of high-quality daycare cite a large study showing that, unlike in the United States, time spent in daycare doesn't seem to increase behavioral problems in Norway. Those in opposition cite research suggesting that childhood psychological problems rose in Sweden as policy drove increasing numbers of children into daycare there.
These are, of course, proposals for dramatic expansions of government power, and they rest on a host of debatable ideological assumptions. As a more immediate practical matter, most parents are correctly skeptical of being told how best to raise their children. Many of these proposals, therefore, will face resistance among Americans who still don't see two parents working full time as an ideal child-rearing situation, however much their economic situation may demand it. And they remain skeptical of government power, especially when it pushes mothers into the workforce in order to pay for the daycare they are forced to fund as taxpayers.
In other words, the government should not encourage women to value their contribution to GDP above all else. And it is deeply unfair for the government either to supply a massive entitlement that is valuable only to families that use daycare or to mandate paid leave, forcing employers to pay workers not to work and blunting mothers' incentives to re-enter the workforce quickly and continue advancing their careers. For ambitious working mothers, these programs can pose real problems. In Sweden, for instance, which pairs extensive paid leave for parents following the birth of a child with essentially free child care thereafter (subsidized to the tune of $20,000 per year per child), women work in very high numbers but cluster in low-prestige government jobs. Knowing that women may leave the workforce for many months if they have a child and that their jobs must be held for them, employers seem to avoid placing women in crucial management positions, thereby curtailing their career prospects.
Government policies that incentivize specific parenting choices have enormous and often unintended consequences for children and their families. And especially since, despite decades of research, there is no clear answer to the question of whether daycare or stay-at-home parenting is better or worse for children and their parents, it is vital that the government stay out of families' decision-making processes. Government policies should neither push mothers into the work force nor keep them from pursuing lucrative and fulfilling careers.
Unfortunately, our current array of tax and welfare policies does both: It pushes mothers into the work force and then punishes them for joining it. In order to eliminate contradictory incentives and stop influencing parenting choices, policymakers must address four specific problems. Two are relatively simple; the other two are not.
First, our Social Security and payroll-tax system encourages women to work less. The formula used to calculate Social Security benefits counts only a worker's highest-paid 35 years, thereby subsidizing those people who work but take a few years off — to stay at home with young children, for instance — at the expense of those who pay more than 35 years' worth of payroll taxes. Furthermore, a non-working spouse is given Social Security payments equal to 50% of the working spouse's benefits (above and beyond those benefits). These features made sense for previous generations, when stay-at-home parenting was the norm. But they make little sense today, given modern family structures, and they should be phased out starting with people who are now in their 30s or 40s. Some redistribution may be necessary and justified since preventing poverty in old age is the purpose of the program, and it is reasonable to treat retired couples as a single unit (for example, continuing to pay benefits after the working spouse dies and splitting benefits for divorced couples). But Social Security payouts should be more or less proportional to individual payroll-tax contributions; otherwise, the policy creates an incentive for women to stay home to take care of children, at least for some portion of their working years.
Second, our tax system simultaneously penalizes women who do not use federally funded daycare, like moms who stay at home. While our tax system is not nearly as problematic as, say, Sweden's (which essentially forces women to work in order to pay the taxes that then fund government-provided child care), it creates the same tension by funding federal daycare subsidies, which are not limited to people in poverty. The dependent-care tax credit allows working parents to knock some of their child-care expenses off of their tax bills, and there is an employer-based program that allows working parents to pay for child care with pre-tax dollars. Some, including the IRS, defend these breaks as reflecting "work-related expenses," but in reality child care is quite similar to commuting, which is not deductible: It's an expense incurred while getting to work, but it stems from decisions made for non-work-related reasons. While these breaks are good for working mothers who send their children to daycare, they discriminate against parents who stay at home or drop their children off with unpaid family members during work hours. They also discriminate against those who don't pay enough in taxes for these kinds of breaks to be valuable; the dependent-care credit, for example, is nonrefundable. Such tax breaks, which help some families at the expense of others and incentivize particular parenting choices, should be eliminated.
These are some instances of the government unambiguously putting its thumb on the scale to prefer one child-care arrangement over another, and they are relatively easy to fix. The much knottier issues have to do with fundamental features of the tax code and the welfare state and how they interact with marriage and childbearing.
MARRIAGE PENALTIES AND MARRIAGE BONUSES
Under current tax policies, a working man who is married to a non-working woman will often find himself in a lower tax bracket than he would as a single man — the thresholds for the couple will be doubled, unless his income is rather high — and he can use his wife's personal exemption. But because the couple then rises through the tax brackets as a single unit, if the woman enters the workforce, her first dollar is taxed at the same marginal rate as the man's last dollar. If she doubles the household's pre-tax income, for example, she will actually contribute a smaller amount than her husband to the household's post-tax income, because her entire income will be taxed at a higher rate.
Further, the tax system gives the same treatment to households with the same income, regardless of whether it takes one worker or two to earn that income. For example, if a husband and wife both make $35,000, they'll be taxed the same as a couple in which the man makes $70,000 and the woman stays at home, even though the latter couple is clearly better off, benefiting from uncompensated child care and avoiding the various other expenses associated with having two people going to work every day.
Conservatives have proposed several different solutions to this problem. One approach is to argue that it is in fact not a problem at all. Ramesh Ponnuru of National Review has written that the tax system should treat married couples as economic partnerships, meaning that the thresholds for all tax brackets for married couples should be double the thresholds for single filers, even at the high end of the income spectrum. This argument holds that the government should not account for the differences between two families with the same income whether there is a single breadwinner or two working parents. Ponnuru's suggestion for tax brackets is clearly fairer than the current system — it is absurd that two people who earn $88,000 or more apiece pay more in taxes if they get married. This particular problem, however, is concentrated among the wealthy, and fixing it would cost billions in lost tax revenue.
Further down the income scale, this approach can dramatically advantage families with a stay-at-home parent by not counting the value of that parent's work as part of the family's income. The purpose of our progressive income-tax system is to draw funds disproportionately from the people who need them least. Therefore, to get an accurate picture of need, we must take into account the considerable economic benefits provided by stay-at-home parents. The oft-quoted salary.com estimate claiming that hiring a stay-at-home parent would cost over $118,000 — more than double the median household income — is clearly exaggerated, but the services that stay-at-home moms provide are indeed not cheap if purchased on the free market. A full-time nanny costs about $35,000 a year, on average.
Another conservative solution, from Aspen Gorry and Sita Slavov of the American Enterprise Institute, would have the government tax individuals rather than households, as happens in the United Kingdom, thereby eliminating all tax benefits and penalties to marriage. This has a superficial appeal, but it would also introduce an enormous problem: If each individual were considered separately, non-working and low-paid married mothers would be eligible for poverty-relief benefits no matter how much their husbands made. The stay-at-home wife of a highly paid professional could qualify for food stamps. Gorry and Slavov address this issue by suggesting that benefit calculations could still be made at the household level — which is, again, the solution implemented in the U.K. This means, to put it bluntly, that the government would treat single-breadwinner couples like individuals when it could charge higher tax rates, but then classify them as consolidated units when it could slash benefits — not a winning formula politically. Further, there is evidence that some couples cheat the welfare system in the U.K. by claiming to be single, and it's hard to blame them.
There is no objective, mathematical way to determine which tax policies are neutral and fair and which ones improperly distort families' decisions. A married stay-at-home mom is not comparable to an unemployed single woman, because she is part of a family that functions as an economic unit. Nor is she comparable to a working mother in a household with the same income, even though the current tax code basically treats her that way, because she provides an immense amount of value in the form of unpaid and untaxed work in the home.
Providing a middle ground between these two proposals, Melissa Kearney and Lesley Turner of the Hamilton Project suggest a simple tweak that could help working couples: Allow secondary earners with children to deduct 20% of the first $60,000 they earn, with the deduction phasing out starting at $110,000 of family income. They calculate that this change would cost $8.2 billion, but the value of the credit would be partially offset by women responding to the new incentive and joining the workforce. Alternatively, they suggest it could be budget-neutral if coupled with a reduction of the spousal exemption targeted toward couples with one earner.
Kearney and Turner may not have found precisely the right arrangement. Maybe the new tax break should be paid for with general tax revenue instead of a tax hike targeted at stay-at-home parents, and maybe the phase-out should be set up differently. But the basic structure of their solution makes sense: It recognizes the disadvantages that families with two working parents face relative to single-worker households of the same income and offers them some relief, but it does so without directly subsidizing specific types of child-care arrangements.
PARENTING, WELFARE, AND WORK
Any discussion of the role of government policy in the choices families make about child care and work is incomplete without acknowledging the perverse incentives of today's welfare state. This is the fourth policy area in need of reform and is perhaps the most daunting. Conservatives and many liberals have long been concerned about the high marginal costs the poor face as they transition out of poverty programs. The poor are eligible for benefits, of course, but those benefits are taken away quickly as beneficiaries make more of their own money, so in many situations it may be economically counterproductive to seek paying work. This system affects marriage and childbearing as well: Welfare programs provide more benefits to families with more children, and those benefits are cut when a mother marries a working man or when a stay-at-home mother decides to enter the workforce.
Though many conservatives consider the welfare reform of the 1990s to have been successful, it didn't come close to solving these problems. In 2012, the Congressional Budget Office calculated that a poor single mother with one child who gets a new job or a raise can lose up to 95% of the additional earned money through lost benefits and additional taxes. For example, if a single mother of one started a job after being unemployed and rose from no pre-tax income to $40,000, she would increase her take-home pay only from $20,000 to $30,000 — a 75% marginal tax rate. Meanwhile, the liberal Economic Policy Institute has found that a married couple with two kids will face quite steep marginal tax rates, up to 36%, as they rise from poverty into the middle class — and that number accounts only for features of the federal tax system like the Earned Income Tax Credit. It does not factor in means-tested poverty spending or state taxes.
Kearney and Turner's secondary-earner deduction would help to address this, but it would not go far enough. As a complement to their tax reform, the child tax credit should be expanded and made fully refundable so that a family would receive the full value of the credit even if it were worth more than the taxes they owe. Currently, the child tax credit is usually $1,000 per child for up to three children. It phases out as income rises, however, and is not always refundable for very poor families. Unlike the current credit, therefore, an improved benefit would simply stay with families as their incomes changed, providing money to those at the bottom without distorting their work and marriage incentives. Just as important, it would free parents at all income levels to make their own decisions. They could use the extra money to pay for child care so the mother could work, or move their kids into a higher-quality daycare facility, or make up some of the income lost when a mother quits her job to stay home — or keep doing whatever they were doing and save the cash for college tuition or retirement or a vacation. The government, while taking a stance in favor of parenthood in general (which is in everyone's interest), would be neutral when it came to the question of whether parents should use daycare or take care of their own kids.
The question, as always, is how to pay for the program. There are approximately 70 million children under the age of 17 in the United States today, meaning that every $1,000 increase in the child tax credit, if used universally, would cost $70 billion annually. The current credit, however, costs far less because it is not always refundable and because it phases out at higher incomes; the cost of the program is estimated to be between $47 billion and $57 billion. Removing both distortions from the current credit — by treating each child as a tax contribution of $1,000 per year, regardless of how much the parents make, and fully refunding any overpayments — would therefore cost between $13 billion and $23 billion. (Alternatively, we could leave the current credit as is and offer an additional credit to all parents, ideally across the board but certainly with no limits for poor and middle-class families.)
There are numerous possible funding sources to cover this expansion. Daycare tax subsidies amount to around $5 billion annually and could be folded into a universal refundable credit. The dependent exemption, which is similar to a child tax credit but perversely provides a bigger break to parents who make more, is worth an average of about $500 per child (on top of the current child tax credit) and could be folded into the improved program as well. More politically far-fetched but economically promising is the mortgage-interest deduction. It costs taxpayers $70 billion a year and mostly helps middle- and upper-class families afford to buy their own homes. It is an extremely inefficient program, however, giving much larger subsidies to wealthier home buyers, rewarding them for buying larger homes in more expensive areas.
Instead of four different programs, each designed to help families in a specific way, all the funding could be rolled into one new, universal, per-child credit of around $1,500. If the federal deduction for state and local taxes, which indiscriminately subsidizes state spending and overwhelmingly benefits the richest taxpayers, were eliminated, another $900 could be added to the universal child credit.
If the child tax credit were expanded, many aspects of the current welfare state, which gives much larger benefits to families with more children, would become redundant. So the cost of the expanded credit could also be offset by cutting some means-tested benefits for poor parents. Many on the left would not support such a move, as they would like to see more money spent on poor parents. But many conservatives are reasonably concerned about the effects of enabling or encouraging childbearing among those who are not prepared for it. If the current welfare system is not pared down as a child tax credit is increased, the additional benefits will only add incentives for poor single mothers to become, and remain, dependent on the state.
Reducing benefits and replacing them with a child tax credit that will not disappear as income rises would improve incentives to work, would not increase the incentive to bear more children, and would leave poor parents just as financially well off as they were before the change. A somewhat similar approach has been proposed by Max Sawicky and Robert Cherry of the Economic Policy Institute. They suggest eliminating the Earned Income Tax Credit (a benefit given to the working poor, especially parents, that phases out quickly as income rises), along with the child tax credit and dependent exemption, to create a single credit that is highest for poor parents but declines slowly and never phases out entirely.
At a cost of $70 billion for each $1,000 in per-child credits, any further increases would be expensive but not impossible. The federal government takes in about $3 trillion per year (and spends $3.5 trillion); every $70 billion in credits would constitute 2.3% of that, and this cost can be revenue-neutral if paired with moderate across-the-board tax hikes. As Reihan Salam recently argued in Slate, because of the contributions parents make to the nation and the future economy simply by virtue of being parents, the federal tax burden falls too heavily on parents and too lightly on non-parents. An increased child tax benefit paired with moderate tax hikes for everyone would have the effect of shifting the tax burden from parents to the childless, and from the expensive child-rearing years of parents' lives to their young adulthood and pre-retirement years.
There are plenty of smaller elements of the system for lawmakers to improve as well. If the child credit were large enough, it may be better to pay it in monthly installments rather than a yearly windfall. Since child care is most expensive when children are young, it could make sense for the credit to start big and then taper off. And forfeiting access to the credit could count against unmarried fathers' child-support payments.
By treating everyone equally, a universal, refundable child tax credit would help ease some of the financial hardships of parenthood without putting a thumb on the scale for parents facing hard choices about work and child care.
Making choices about parenting, work, and daycare is not an appropriate role for the government. There is, however, a strong bipartisan case to be made for the government helping to make raising children more affordable in general. Conservatives have long argued that child-rearing is an overtaxed activity in the United States. Children are expensive to raise but necessary to the future of our society and, more prosaically, the health of our entitlement system — since non-parents are just as eligible for Social Security as parents are, they arguably free-ride off the investments of parents.
The free-riding argument is controversial, to be sure, and we should not forget that children go on to consume entitlements themselves. But there are broader arguments for changing the tax treatment of parenthood and our welfare system as well. Americans are having children at a rate lower than the replacement rate, which is problematic for everyone. And despite the decline in fertility, the overwhelming majority of Americans still become parents at some point in their lives — and face the financial challenges inherent in that decision. So shifting taxes away from parents will benefit almost everyone and will cost almost everyone at different times of life, as opposed to cutting taxes for some and increasing taxes for others in ways that do not spread their costs and benefits across the life cycle.
Given recent trends in family structure and child-care arrangements, our government faces an immense challenge when it comes to treating parents consistently across a wide range of situations. The current system is rife with biases and bad incentives, pushing mothers into and out of the workforce simultaneously while often discouraging the poor from working harder — all while undervaluing the contributions parents make to our country's future. Fixing these problems should be a priority.