Taxing Tiny Tim: California Raises Taxes for Parents

In a bizarre twist that reminds one of Scrooge rather than Schwarzenegger, the state of California decided last spring to significantly reduce its dependent tax credit.  In other words, it just became even more difficult to raise future California tax payers.

California parents can no longer count on their little ones for the $309 per child tax credit they enjoyed in previous years; according to the state, each child is now worth a mere $99 credit.  This effectively raises a parent’s taxes by about $210 per child, per year, placing a significant burden on the large families that need this credit most.  This cut, which was buried in the massive budget package Governor Schwarzenegger signed in February, will be an unwelcome surprise to many parents.

It is no secret that California is in serious financial trouble.  Tax increases are inevitable; however, since the funds that California is attempting to raise through this tax increase will come from parents, one wonders why lawmakers continue to subsidize a very profitable organization that aims to prevent parenthood altogether.

Planned Parenthood receives millions of dollars from California taxpayers each year.  The organization claims that none of these dollars directly fund abortions; however, money is fungible.  The tax dollars Planned Parenthood receives for preventive care services enable it to devote other income to providing abortions, and thanks to the recent cuts in dependent tax credits, California will soon have more of those tax dollars to give out.

In the long term, higher taxes for parents will mean fewer California children.  As one blogger pointed out recently,

Economists have a rule: If you want more of something, subsidize it; and if you want less of something, tax it.

If California wants to encourage the growth of the next generation of voters and taxpayers, it’s going to have to stop penalizing parenthood – not because families have caused the current deficit, but because they are its best long-term solution.

Surprisingly, most pro-life, pro-family Conservative commentators have been slow to target the tax code’s anti-family bias.  Ramesh Ponnuru is a notable exception, but the McCain campaign’s tax policies indicated that Ponnuru’s recommendations have fallen on all-too-deaf ears.  It’s easy to rally around a perceived injustice, but difficult to do the harder work of real reform; in this case it seems it’s even difficult for commentators to suggest we do so.

The Right has an unfortunate tendency to present negative solutions to social problems when positive solutions would be both more effective and more attractive to potential detractors.  The current move to defund Planned Parenthood is a prime example of this tendency.  While many pro-life organizations are working to defund Planned Parenthood, few are focusing on viable alternative solutions that would help families with children who have already been born.  In their zeal for saving future families, pro-life activists have sometimes failed to help existing families thrive and expand.

While Planned Parenthood should certainly lose funding, households struggling to raise children should not; after all, parents raising children will frequently bear and raise more children if they have the economic means to do so.  Our social and economic success depends on stable families, and our laws and tax policies ought to reflect this fact.  Unfortunately, as California illustrates, they often penalize the parents whose children will be the source of tomorrow’s income.

Worse, our tax policies burden stable families while our welfare programs encourage single parenthood.  Readily available programs like WIC and Healthy Families do help women and children in one way, but also hurt them by making it easy for husbands and fathers to leave them, secure in the knowledge that the state will provide what they will not.  For many women the state is provider, protector, and enabler – all at the expense of the mothers and fathers whose children the state so desperately needs.

A comprehensive, long-term solution to California’s budget problems would involve both the removal of tax dollars from economically destructive organizations like Planned Parenthood and positive tax exemptions for those raising children.  Unfortunately, the pro-life movement has not always put enough emphasis on the positive side of this equation.  If pro-lifers want to win the hearts and minds of the citizens of California, they need to offer positive solutions to the social and economic problems that have usually been addressed through some form of negation.  California will have to do the same for its families if it hopes to solve its financial problems – as even Scrooge eventually realized. ‘