The Magazine

Tax Cuts for Kids

A pro-family agenda for 2008.

Jul 9, 2007, Vol. 12, No. 40 • By CESAR CONDA and ROBERT STEIN
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Nonparents already pay for schools. When nonparents complain about having to pay school-related taxes, they are saying, in effect, that they were entitled to a free K-12 education without ever having to pay for one.

The proposal takes too many people off the tax rolls each year, increasing the public's appetite for more government spending. Workers move across income classes over time, which is why static tax distribution tables are often misleading. Given this dynamism, we should not be concerned with some workers falling off the tax rolls in a particular year, based on where they are in their life cycle. Parents will pay higher taxes when their kids grow up and parents with more after-tax income are less likely to demand government services.

For years, supply-siders and progressives have talked past each other. Our proposal lets both sides get their way. By using generous family-related credits and a reduced top marginal rate that kicks in at lower income levels, the tax code would become substantially more progressive. The rich would pay more but, with a lower top marginal tax rate, have better incentives to work harder and invest more. The middle class and those below would pay less and have their tax burden shifted away from the years when they need it the most, when they are raising children.

Cesar Conda, former assistant for domestic policy to Vice President Cheney, is a principal with Navigators, LLC. Robert Stein is a senior economist with First Trust Advisors, LP, and a former deputy assistant secretary for macroeconomic analysis at the Treasury Department.