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Steven's avatar

Very interesting. I'm not certain I fully understand all of it and I'm even less sure I necessarily agree with all of it, but you've actually made a discourse on taxation interesting, accessible, and applicable. Thank you.

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Marissa Mowbray's avatar

Great article! I broadly agree with this approach, but as a mom of a large family, I can't help but wonder: could this have the unintended effect of (effectively) taxing parents at a higher rate than non-parents? Those with kids are often forced to spend more of their money upfront (on education, gas, groceries, housing) and can't afford to save/invest as large a percentage of it. When we (and many of our friends) ceased to be DINKs and became parents, two immediate effects were:

1) Loss of gross income as one parent (typically mom) scaled back work hours or left her job to care for kids. This kicked many of us down to lower "income tax brackets";

2) More immediate, upfront "consumption spending" and less ability to save/invest. Those of us who had "saved aggressively" before kids could no longer sustain this, at all. This problem gets worse, not better, over time due to upfront costs of education, housing, transportation etc. that disproportionately affect larger families. I would consider this essential, rather than luxury consumption; most couples we knew, after having kids, were doing less luxury spending than before, but "consuming" more from their paychecks overall.

Even assuming no loss of income, this creates a situation where a couple might be penalized or stand to lose *relative* purchasing power if they chose to accept the upfront costs that come with children. I still think that consumption-based taxation is probably the best (and maybe inevitable) way forward, but I'd be curious about exemptions/mitigating incentives that could avoid further suppressing birthrate among the striver classes. Child tax credits, expanded childhood education savings accounts, school vouchers, housing/transportation tax relief for families, etc.

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