4 ms·

Lets say child care costs you $12 an hour. That means staying home is 'worth' $12 an hour to you. In order to make it worth going to work, you need to make $12/

Lets say child care costs you $12 an hour. That means staying home is 'worth' $12 an hour to you. In order to make it worth going to work, you need to make $12/hr + taxes. Otherwise youre actually losing money by going to work. In other words, our tax system is encouraging people to stay home. Whether or not we want to do that is up for debate but we can fix this by 1) taxing stay at home moms for the value they are creating or 2) removing child care service taxes. Its a valid argument.

zanny 11y ago
> 1) taxing stay at home moms for the value they are creating That sounds incredibly distopian. Plenty of studies show the benefits of children being raised by their actual parents. If anything, the bias towards staying at home is not strong enough, because it only has negative motivators - the taxes on paying childcare / having a career. That doesn't make it any easier to have either or preferably both parents actively raise the child where neither of them have to be absent from their life to provide food and shelter, but it does make it harder to have both parents working. But that hardship demonstrably does not outweigh the lost income, since so many households are two income with children in third party care services. I would hesitate to ever advocate trying to punish dual income households more for using child care services, since those are exactly the ones who often have no choice in the matter.
- e12e 11y ago
  >> 1) taxing stay at home moms for the value they are creating > That sounds incredibly distopian. It sounds a bit sexist (as if moms should stay home and their spouse, male of female should be employed) - but it's only dystopian if society doesn't recognize that the work not only needs to be taxed, but also rewarded. For example, with basic income - or simply by paying people to stay home to care for their kids. The problem with the latter is that it reinforces gender stereotypes in a job market where there is gender difference in pay (ie: all current real-world job markets) -- it makes financial sense for the one that makes the least above caregiver compensation to stay home. I'm sure there are other ways to combat this (say base compensation on whole-household income, so that the net will end up being roughly the same no matter who stays home) -- but it's not entirely trivial to figure out.
  - eru 11y ago
    In Germany, you can juggle maternity and paternity leave as you please---the state only cares about the sum. In Sweden, there's fixed maternity and paternity leave of the same length. German fathers don't stay home for the kids much---it's almost all used by the mothers. Sweden's use-it-or-lose-it approach seems to work better if you goal is to get fathers to take time off.
  - zanny 11y ago
    > It sounds a bit sexist (as if moms should stay home and their spouse, male of female should be employed) I never implied that. Preferably society would be rich enough both parents could raise their kids without having to fend for survival while doing so. I would hope we have advanced as a species enough at this point, generated enough wealth at this point, to enable that. And if that were not possible, I know classical sexism would drive the women to stay home, but preferrably whoever preferred their job would continue working and the other could raise the children, irrespective of sex. > For example, with basic income UBI is almost certainly the optimal solution here. I'd argue because it enables that joint parental rearing much more often - if parents have any financial assets they could potentially both drop out of the workforce to optimally raise their child, and depending on their wealth they could both withdraw for variable lengths of time. Even in the worst case scenario one successful careered individual in a family of two with joint UBI should definitely be able to have a stay at home parent and a working one maintain a working class lifestyle.
vacri 11y ago
> 2) removing child care service taxes. Remove those taxes, and the new fees will just bump up to the same amount. The fees are where they are because people have been shown to be willing to pay them. Take out a cost center, and the bosses will simply pocket the difference.
- eru 11y ago
  That's why we should also lower barriers to entry.
cperciva 11y ago
1) taxing stay at home moms for the value they are creating or 2) removing child care service taxes. Or 3) allowing a deduction from income equal to the amount spent on child care. This is the option Canada takes, incidentally; the only thing I don't like about it is that you're not allowed to pay your spouse for child care, and so stay-at-home fathers end up without any taxable income and thus without any pension contributions.
- randyrand 11y ago
  How is that different from removing child care service taxes? The only difference I can see if that you have to wait till tax day to get your money back.
  - cperciva 11y ago
    Different people have different marginal tax rates.
    - randyrand 11y ago
      Ah yes. So doing it on tax day actually saves people with higher marginal tax rates more money than those with lower ones. Interesting.
- eitally 11y ago
  The US does this, too, but it has a pretty low phase-out threshold and most folks with HHI > $100k don't see any benefit. In middle America, $100k is still quite good money, but not on the coasts.
sokoloff 11y ago
Agreeing and amplifying your first point: it's worse than that, it's ($12 + incremental expenses [expressed hourly]) / (1 - marginal tax rate). You have to use marginal rate, not average rate here, of course. Incremental expenses (commuting, wardrobe, lunch, and other work-related costs) are surprisingly higher than most people realize. For a couple in even a middle marginal rate, where the second worker would drive only 20 miles round trip [including to/from daycare site twice] ($10/day) and pay $5 more for lunch than eating at home and pay an extra $1000/yr for a work wardrobe, it's easy to need to cover $4000 just for the expenses of working, plus the ~$26K or so for childcare, so you need to earn $50K just to break even if your combined marginal bracket (fed + state + local + FICA + Medicare) is "only" 40%. It's even worse if the second full-time job requires an additional or better[more reliable] car, paying for parking, or any other recurring expenses. If the stress results in needing extra spa days, meals out because everyone's too pooped to cook, vacations to get back family time, etc, it can really sky-rocket. In terms of time, you save two adult trips to daycare, the full commute, and all the coordination overhead of dealing with childcare provider issues (family daycare providers get sick, take their own vacations, and in our case, randomly closed on short notice sometimes). My wife is highly educated and left a very good position because she would have otherwise been working only for her 401K contributions. Several years in, everyone in our family is thrilled with that choice, it's way less stressful overall, and I'm convinced our children are way better off for it. (Though our daycare costs and marginal rate were somewhat higher than the figures in this example, there are many cases where the economic cost to one spouse staying at home is quite low.) On your second point, I don't agree that the tax system needs to be patched for this as a special case. IMO, we should reduce taxes across the board, but failing the will to do that, we should accept that the system creates these incentives and educate people as to the math and the reality that, with more than one kid pre-K, it's almost surely a low (or even negative) cost for one parent to stay home. Taxing a stay at home parent for imputed childcare costs is a crazily slippery slope. Must I pay taxes if I do my own dishes, clean my own house, cut my own grass, do my own laundry, cook my own dinner, fix my own brakes, clean my own gutters, fix my kid's broken toy, etc, etc?

zanny 11y ago

> 1) taxing stay at home moms for the value they are creating That sounds incredibly distopian. Plenty of studies show the benefits of children being raised by their actual parents. If anything, the bias towards staying at home is not strong enough, because it only has negative motivators - the taxes on paying childcare / having a career. That doesn't make it any easier to have either or preferably both parents actively raise the child where neither of them have to be absent from their life to provide food and shelter, but it does make it harder to have both parents working. But that hardship demonstrably does not outweigh the lost income, since so many households are two income with children in third party care services. I would hesitate to ever advocate trying to punish dual income households more for using child care services, since those are exactly the ones who often have no choice in the matter.

e12e 11y ago
>> 1) taxing stay at home moms for the value they are creating > That sounds incredibly distopian. It sounds a bit sexist (as if moms should stay home and their spouse, male of female should be employed) - but it's only dystopian if society doesn't recognize that the work not only needs to be taxed, but also rewarded. For example, with basic income - or simply by paying people to stay home to care for their kids. The problem with the latter is that it reinforces gender stereotypes in a job market where there is gender difference in pay (ie: all current real-world job markets) -- it makes financial sense for the one that makes the least above caregiver compensation to stay home. I'm sure there are other ways to combat this (say base compensation on whole-household income, so that the net will end up being roughly the same no matter who stays home) -- but it's not entirely trivial to figure out.
- eru 11y ago
  In Germany, you can juggle maternity and paternity leave as you please---the state only cares about the sum. In Sweden, there's fixed maternity and paternity leave of the same length. German fathers don't stay home for the kids much---it's almost all used by the mothers. Sweden's use-it-or-lose-it approach seems to work better if you goal is to get fathers to take time off.
- zanny 11y ago
  > It sounds a bit sexist (as if moms should stay home and their spouse, male of female should be employed) I never implied that. Preferably society would be rich enough both parents could raise their kids without having to fend for survival while doing so. I would hope we have advanced as a species enough at this point, generated enough wealth at this point, to enable that. And if that were not possible, I know classical sexism would drive the women to stay home, but preferrably whoever preferred their job would continue working and the other could raise the children, irrespective of sex. > For example, with basic income UBI is almost certainly the optimal solution here. I'd argue because it enables that joint parental rearing much more often - if parents have any financial assets they could potentially both drop out of the workforce to optimally raise their child, and depending on their wealth they could both withdraw for variable lengths of time. Even in the worst case scenario one successful careered individual in a family of two with joint UBI should definitely be able to have a stay at home parent and a working one maintain a working class lifestyle.

vacri 11y ago

> 2) removing child care service taxes. Remove those taxes, and the new fees will just bump up to the same amount. The fees are where they are because people have been shown to be willing to pay them. Take out a cost center, and the bosses will simply pocket the difference.

eru 11y ago
That's why we should also lower barriers to entry.

cperciva 11y ago

1) taxing stay at home moms for the value they are creating or 2) removing child care service taxes. Or 3) allowing a deduction from income equal to the amount spent on child care. This is the option Canada takes, incidentally; the only thing I don't like about it is that you're not allowed to pay your spouse for child care, and so stay-at-home fathers end up without any taxable income and thus without any pension contributions.

randyrand 11y ago
How is that different from removing child care service taxes? The only difference I can see if that you have to wait till tax day to get your money back.
- cperciva 11y ago
  Different people have different marginal tax rates.
  - randyrand 11y ago
    Ah yes. So doing it on tax day actually saves people with higher marginal tax rates more money than those with lower ones. Interesting.
eitally 11y ago
The US does this, too, but it has a pretty low phase-out threshold and most folks with HHI > $100k don't see any benefit. In middle America, $100k is still quite good money, but not on the coasts.

sokoloff 11y ago

Agreeing and amplifying your first point: it's worse than that, it's ($12 + incremental expenses [expressed hourly]) / (1 - marginal tax rate). You have to use marginal rate, not average rate here, of course. Incremental expenses (commuting, wardrobe, lunch, and other work-related costs) are surprisingly higher than most people realize. For a couple in even a middle marginal rate, where the second worker would drive only 20 miles round trip [including to/from daycare site twice] ($10/day) and pay $5 more for lunch than eating at home and pay an extra $1000/yr for a work wardrobe, it's easy to need to cover $4000 just for the expenses of working, plus the ~$26K or so for childcare, so you need to earn $50K just to break even if your combined marginal bracket (fed + state + local + FICA + Medicare) is "only" 40%. It's even worse if the second full-time job requires an additional or better[more reliable] car, paying for parking, or any other recurring expenses. If the stress results in needing extra spa days, meals out because everyone's too pooped to cook, vacations to get back family time, etc, it can really sky-rocket. In terms of time, you save two adult trips to daycare, the full commute, and all the coordination overhead of dealing with childcare provider issues (family daycare providers get sick, take their own vacations, and in our case, randomly closed on short notice sometimes). My wife is highly educated and left a very good position because she would have otherwise been working only for her 401K contributions. Several years in, everyone in our family is thrilled with that choice, it's way less stressful overall, and I'm convinced our children are way better off for it. (Though our daycare costs and marginal rate were somewhat higher than the figures in this example, there are many cases where the economic cost to one spouse staying at home is quite low.) On your second point, I don't agree that the tax system needs to be patched for this as a special case. IMO, we should reduce taxes across the board, but failing the will to do that, we should accept that the system creates these incentives and educate people as to the math and the reality that, with more than one kid pre-K, it's almost surely a low (or even negative) cost for one parent to stay home. Taxing a stay at home parent for imputed childcare costs is a crazily slippery slope. Must I pay taxes if I do my own dishes, clean my own house, cut my own grass, do my own laundry, cook my own dinner, fix my own brakes, clean my own gutters, fix my kid's broken toy, etc, etc?