Australian Academic Proposes Tax Penalty For New Children

December 10, 2007

One of the ten principles of sound tax policy is neutrality—the fundamental purpose of taxes is to raise necessary revenue for programs, not micromanaging a complex market economy with subsidies and penalties. Unfortunately, our tax code is crammed with provisions designed to encourage politically-favored activities, discourage politically-disfavored activities (and occasionally to encourage and discourage the same activity simultaneously).

Turning the tax code into an instrument of societal transformation means it can oscillate with shifting political majorities. One example is how the tax code encourages having children. A new child means an additional exemption, a $1,000 child tax credit, with prominent presidential candidates proposing additional tax credits and even “baby bonds.”

Australian parents get similar treatment, with an A$4000 (US$3,500) bonus paid for new infants. But one academic thinks the favorable tax treatment is backwards:

Australia should slap a lifelong baby tax on parents with more than two children to offset the carbon dioxide emissions produced by their additional offspring, a medical expert said Monday.

Parents should have to pay a 5,000 Australian dollar (US$4,382; €2,991) levy for each child after their first two, along with an annual tax of up to A$800 (US$701; €478) to plant enough trees to offset the emissions generated over each child’s lifetime, according to Barry Walters, an obstetrics professor with the government-funded University of Western Australia.

In a letter to the editor of the respected Medical Journal of Australia published Monday, Walters also recommended that citizens who use contraceptives or undergo sterilization should be entitled to reduce their annual income tax using carbon credits.

When the tax code loses neutrality and becomes a cookie jar, it’s all or nothing—either the code will treat children as a net gain for society, or a net loss.

See our Ten Principles of Sound Tax Policy here.

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