Critical Section

Child Tax Credits and the Mutilated Beggar Effect

Monday,  06/09/03  07:13 PM

Recently there has been discussion about the child tax credit which is part of the Bush administration's proposed tax cut.  Essentially it amounts to a $400/child tax deduction for families making less than $26K/year.  Both Republicans and Democrats are in favor of this credit, with the only disagreement being whether the credit should be temporary (Republicans) or permanent (Democrats).

Naturally both sides are falling over themselves emphasizing that they are in favor of the tax credit.  Nobody wants to appear to be opposed to a tax credit which helps poor families with children.  Well, I am opposed to it, and here's why.

This is a classic example of the "mutilated beggar effect".  Please let me digress momentarily to explain this.  In Cairo there exists a cottage industry which mutilates children to be used as beggars.  The more gruesome and pitiable the mutilations, the more the beggars will earn.  The disfigured children are placed on mats on street corners with a begging bowl and they ask for alms for the love of Allah.  The almsgiver is doing a good thing and a bad thing.  The good thing is paying for the mutilated child's next meal.  The bad thing is supporting a system which caused the child to be mutilated in the first place.

What is the analogy?  By giving poor families a per-child tax credit, we are doing a good thing and a bad thing.  The good thing is that we are paying for poor childrens' meals, clothing, etc.  The bad thing is supporting a system which financially encourages poor families to have more children than they can support themselves.

Families should not have more children than they are able to support.  If there were no social welfare, richer families would logically be larger families, since they could support more children.  In fact all through recorded human history and continuing to the present day poorer families tend to be larger.  In the past when people lived in agrarian communities this was an acceptable and appropriate state of affairs, since the children of a family were put to work farming and essentially "paid for themselves" via their work.  Now that most people live in urban communities this is no longer the case, and poor families can only be large if society supports them.

The logic is inescapable - the more society supports poor families' children, the more poor families are encouraged to have more children, and the more poor children there will be for society to support.  It is a loop with no exit.  Only by decreasing the financial incentives for having children will poor families adjust their numbers of children to be consistent with their ability to support them.  But this would take time, and political courage, because in the meantime poor children would be worse off.

There is zero chance that any politician will publicly take my point of view.  Why?  Because everyone would be horrified!  That would be - gasp! - like arguing against motherhood!  Yeah, so?

People often use "motherhood" as something nobody could be against.  As in, "arguing against child tax credits is like arguing against motherhood".  Let's think about this for a moment.  Why is "motherhood" something everyone can agree on?  Should every woman have as many children as she can?  Most women are physically capable of having about twenty children in their lives.  Should they do so?  Would society then just jump in and feed and clothe and educate all these children?  It doesn't really make sense.  In point of fact arguing against child tax credits is exactly like arguing against motherhood, or at least against irresponsible motherhood, and this is a good thing.

Perhaps you agree with this logic, but what can be done?  If no politician is willing to oppose motherhood (imagine the outcry), then are we doomed to an ever-increasing subsidy for poor families' children?  Already it is the case that in the U.S. a teenager with no marketable skills is financially better off having a child and going on welfare than she is working a minimum wage job.  Furthermore, if she marries the kid's father, she'll get less welfare.  Think about that for a moment, and then consider that 69% of all U.S. inner-city kids are born to a single mother.  This isn't a mystery, is it?  We're paying unskilled women to have kids, and paying them to stay single, so that's what they do.  It is just water flowing downhill.

I realize this can't all be reversed overnight.  Any change in these incentives would have to be phased in gradually over many years to avoid penalizing people (and their kids) for following the incentives.  But at least we can start by not making things worse.  Why use a tax cut designed to stimulate the economy as an excuse to increase the incentive for poor women to have children?

Let's go back to the child tax credit.  It was always part of the Bush plan, but pressure from Democrats has expanded it.  As Tom DeLay (R) put it, "To me, it's a little difficult to give tax relief to people who don't pay income taxes.  It's a spending program."  And the spending is a subsidy for having children.  The other point of view comes from Artur Davis (R), "People who are making between $10,000 and $20,000 can't throw a fund-raiser, don't have large teams of lobbyists, but they're people doing hard work for their country.  We ought to be valuing their contributions, not ignoring them."  Sure, let's value their contributions, but let's not pay them to have kids they can't afford.

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