- The Washington Times - Saturday, March 19, 2005

Ronald Reagan once said: “Our most precious resources, our greatest hope for the future, are the minds and hearts of our people, especially our children.”

In the days before Social Security, having hope in the minds and hearts of children was particularly important for parents who depended on their offspring for financial help in their old age. Back then, children were not only sources of love and affection for their parents; they were also often their sole means of financial support upon retirement. That all changed with the advent of Social Security.

With Social Security, people no longer had to rely on their children for financial help in their twilight years. To qualify for benefits, people didn’t need large families — only to be old.

The largest U.S. entitlement program has grown (now nearing 5 percent of GDP) in tandem with decreasing birthrates that soon will result in too few workers to pay for retiree benefits.

Simply put, Americans are not having enough children to pay for a growing pool of retirees. Put another way, if the average maternity ward in America turned out a few more babies each day, we wouldn’t have the trouble we face.

Yet Social Security ironically creates significant disincentives to people having the very children it needs to sustain itself. Since Social Security provides the same benefits to people who pass up parenthood as those who have large families and supply the economy the workers it needs to survive, the system highlights a tax code inequity that is effectively a “parenthood penalty.”

Singles with no children receive the same Social Security annuity as the parents of 10 children, even though they don’t incur the financial costs (now estimated at $200,000 each) of raising children. Parents create value for society and the overall economy by having and raising human capital, but they get no direct financial benefit.

There is a straightforward measure that can correct this injustice: minimize the disincentive to parenthood by offering tax breaks to married parents.

For instance, have a child and your payroll tax decreases by one-fourth; have two children it drops by half, and so on. Your taxes would stay reduced until all your children become adults, as long as you remain married.

Why married, you ask? Married parents who raise and educate their children contribute something very valuable to the system: workers the economy can depend on. Under this plan, unmarried and single parents would receive no tax relief. While we must acknowledge the Herculean job most single parents do raising their children, the truth is that children from single-parent and unmarried-parent households don’t fare as well as those brought up in stable, married households.

In fact, empirical analyses confirm married parents offer a more stable structure in which to raise children and that these children grow up to contribute most to the economy.

A recent study by the Heritage Foundation found adolescents from intact, married-parent households were half as likely to be in poor health; half as likely to be jailed as adults; and half as likely to be depressed as adults (all variables highly correlated with lower economic output) than adolescents from single-parent or unmarried-parent families.

If, however, a single parent or unmarried couple with children were to marry, they would immediately qualify for the tax relief. On the other hand, if parents divorce, the tax benefits would be removed. Thus, a tax code that formerly penalized parenthood would be changed to abolish the disincentives to marry and raise the very children the system needs to thrive.

Not too long ago it was commonly believed an increasing population threatened future economic prosperity. Today, a declining population can be seen as doing the same.

For too long we have watched an unjust tax code create implicit penalties for married families, the bedrock of our society. Reforming our tax code to assist stable families as they develop the hearts and minds of our children — “our most valuable resources, our greatest hope for the future” — is not only good for our families, it is good for our economy too.


Mr. Allott is a writer for a D.C.-area public policy group.

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