http://artbank.ch/giftstax.html

In other words, the government does quite a bit, it’s just the knowledge about this “doing”is with masses…

1. “the relevant comparison of wellbeing is to take account of all the individuals in a household, including the children. ” and “to simply make welfare comparisons across households as if only the adults mattered is wrong”
Agreed - children are people.

2. I also agree with your second principle that: “all parents should make a significant contribution to their own children, or otherwise we would be socialising the cost with probably adverse implications for incentives.”

Where I disagree is on:

1. Who benefits from FTB and what this implies.
(a) I don’t have data to dispute that 85-90% of people will have children in their lifetimes. But if true, surely that means that (i) giving even a modest benefit to families *really* screws childless adults; and (ii) an awful lot of (inefficient) churning is going on.
(b) Your assertion that childless people benefit substantially in net terms from other people’s children. I’m not convinced this is true - I suspect there is a significant demographic dividend to my generation (X) if we don’t have kids because we will not have to bear the cost of raising and educating them for 25 years before they become productive. (This is not to say that having been born, educating kids is a bad idea.) And what’s the counterfactual? I suspect I would get a better return from my money investing in emerging markets over the long term and importing domestic labour if and when I need it down the track. Because that’s all other people’s kids are to me – future (expensive) labour and a nuisance in the meantime.

2. “I also think that the analogy with people taking on debts doesn’t work at a number of levels.
For example, there are extensive direct and indirect subsidies for various forms of saving that reduce current consumption, including superannuation and home purchase. Now one might argue that these interventions are not justified, but they do exist.”

Isn’t this a non sequitur? What do superannuation tax benefits have to do with consumer debts or FTB? They are completely unrelated. You didn’t actually explain why the analogy does not work. My point was that people can become impoverished for a number of reasons, not just having children. And if you cared only about material wellbeing outcomes, you would give people money regardless of how they got themselves impoverished. But we don’t do this because we think people who incur consumer debts should be responsible for the consequences of their actions. Why not the same for those adults who have children? This point holds even if the money is used directly for the children: Presumably parents care about their children and hence derive satisfaction from them being provided for. Yes, children are people but they are the creation, and I believe, the responsibility of their parents. You seem to agree with this view to an extent (see above).
To my mind, the key rationale for differentiating between families and debt-fueled consumers is a moral one – having children is regarded as more worthy than incurring consumer debt. I disagree that it is, given that people have children for their own gratification, not for the good of the country.

Getting away from the really poor category, surely this figure supports Andrew’s worry that $64K is too high — as it simply is going to be an everyone subsidy. Based on median wages, this number is going to catch the majority of single worker families and a fair chunk of 1 full time/1 part time working families as well. Why have a subsidy the majority of the population gets and ends paying for? I also don’t think the OECD figures are a good guide because I can’t see how many of the countries at hand are going to afford to maintain their subsidies, particularily with the greater levels of people movement across countries. Its hardly even worth working in some countries in Europe if you are childless, and this isn’t a good way to stop emmigration of a fair number of the most motivated people in your workforce (let alone get motivated people back — something that countries like Australia rely on).

An early objective was related to the concept of paying tax according to ability to pay, with the idea that people who were supporting children had less ability to pay tax than people without children. Over time, these tax deductions became tax rebates and then cash payments, largely because successive governments wanted to target more of the tax relief to lower income families and to make tax benefits refundable.

In addition, governments were concerned about poverty among low income families with children, and provided benefits to children of people who were unemployed or disabled or sole parents.

Then in the 1980s governments became concerned about work disincentives because very low paid working families could have lower disposable incomes than those on benefits, so they increased benefits for low income working families with children. Under the Accord, workers also traded-off wage increases for these higher family payments.

As a result, the Australian system is now among the most targeted in the OECD. For families with very low incomes, Australian assistance is about the third highest in the OECD (adding cash payments to tax reductions and expressed as a percentage of the average wage in each country). For higher income families over 150% of the average wage, Australian benefits are about one-third of the OECD average.

One could move back to providing support to familiesthrough the tax system; this has been proposed by CIS for example, but if you wanted to keep the targeting to low income families, then a large part of the system would look very much like it is now.

However, as I read the CIS proposal, it actually involves larger tax reductions for high income families than are now currently available. To me this seems inconsistent with the ideas underlying the original post.

It’s the $64,000 answer I am worried about:)