In effect, we work from January 1 to May 3 or so for the government, and only after that for ourselves.
Americans who have children especially feel the pinch. The increase in the deduction for dependents over the nineties provided long-overdue tax relief for families with children. Yet there is much more to be done to shift the tax burden away from parents. The child tax credit, the marriage penalty, and the alternative minimum tax all need to be addressed.
President Bush is correct when it comes to the child tax credit. As he said in his recent speech to Congress, “I want to help families rear and support their children, so we doubled the child credit to $1,000 per child.”
This is not only the right action, it is the right message. Those Americans who are generous in bearing and raising children are benefiting society as a whole, and their sacrifice not only needs to be recognized, it needs to be eased. Doubling the child tax credit from $500 to $1,000 helps to reduce the burden on parents in every tax bracket, leaving more money in their pockets to care for and educate their children.
The nation’s tax code should also be adjusted in another way: Married couples should not pay more in taxes just because they are married. This marriage penalty, as it is called, should be eliminated. The way the tax rates are now structured, couples have a financial incentive to cohabit.
Bush has proposed to end the marriage penalty by providing a 10 percent deduction for two-earner families. But what about stay-at-home moms who have sacrificed a career to better nurture their children? Bush’s proposal provides no relief for such single-earner families. Phyllis Schlafly labels the result a “homemaker penalty,” and she is right. Relief should be extended to all married couples, not just to those in which both husband and wife work outside the home.
It is not enough to stop undermining marriage. We must make it possible for mothers of small and not-so-small children to stay at home. Having a parent in the home is the best defense against a host of social ills.
Finally, there is the so-called Alternative Minimum Tax. The AMT rules were designed to capture revenue from wealthy taxpayers by exposing income from tax shelters. Those who owe no taxes under conventional rules are required to recalculate their taxes a second time using the Alternative Minimum Tax rules. These rules allow virtually no deductions or credits, ensuring that the taxpayer renders Caesar his due.
It troubles me that our elected government has inflicted two sets of rules upon us. If certain investment activities are to be sheltered from taxes, then sheltered they should be. Devising a second set of rules to recapture some of this “lost” revenue seems to me to violate the principle of fairness.
More to the point, the Alternative Minimum Tax has unintentionally become a nightmare for large families. After taking their dependent’s deduction and their Child Tax Credit, many families with four of more children now find that, under the original tax schedule, they owe little or no income tax. But then, precisely because they owe little or no tax, they are required to recalculate their taxes using the AMT rules. They often find themselves with hefty tax bills.
This inequity should be corrected. Babies are not tax shelters; they are investments in the future.
The above steps will only marginally offset the tremendous emotional, physical and financial sacrifices that parents make to raise their children. According to the U.S. Department of Agriculture the average family making less than $36,800 will spend $117,390 to raise one child from birth to age 18.  Yet, without their willingness to welcome and raise children, our society would not long exist.
The children being born today will be the citizens of tomorrow who will provide for the elderly, man our military, run our hospitals, and stock our grocery shelves. They will be the people who will maintain and provide for every kind of structure, institution and service necessary so that Americans can be safe and healthy and continue to enjoy freedom and prosperity.
Since 1974, American families have not been having enough children to replace our population. Were it not for immigration, we would be — like Europe and Japan — facing the prospect of depopulation.
Couples should not be penalized for getting married, nor should they be burdened with oppressive taxes as they begin families. Eliminating the marriage penalty and the Alternative Minimum Tax and increasing the child tax credit are steps in the right direction.
(Steven W. Mosher is President of the Population Research Institute, and author of Hegemon: China’s Plan to Dominate Asia and the World.)