A century ago, President Theodore Roosevelt remarked: “It is in the life of the family, upon which in the last analysis the whole welfare of the Nation rests....The nation is nothing but the aggregate of the families within its borders.”[1]  He added that “everything” of value in American public life “rests upon the home.”[2]

Today, members of Congress — led by Senator Sam Brownback of Kansas and Representative Lee Terry of Nebraska — reaffirm these truths and put forward a set of new policy ideas to strengthen the autonomy of the family in America.  The “Parents’ Tax Relief Act of 2005” is, in my opinion, the most important piece of pro-family legislation to be introduced in decades.  It recognizes the value of the parental care of small children and expands the child-care choices of all new mothers and fathers.  It affirms marriage as a public good and restores recognition of the marital couple as an economic partnership.  The bill properly affirms the value of children to the nation and responds to the extra economic burdens faced by young parents.  This measure seeks to reduce conflicts between workplace and home by making it easier for the home itself to be a place for market labor.  And the measure recognizes the full-time mother or father as doing publicly valued work, deserving recognition within the Social Security system.

These approaches are distinctly American.  Most other developed nations provide state child allowances to parents as offsets to the costs of rearing children.  However, this method tends to make families wards of the state and to weaken marriage.  In contrast, the “Parents’ Tax Relief Act of 2005” uses carefully targeted tax policy measures to enable families to retain more of their own earned income while children are in the home.  The record shows that this approach supports family formation and strengthens homes.[3]

Viewed from another angle, this bill would also eliminate problems and inequities that have crept into federal tax policy.  For example, federal law currently gives a generous tax credit, or subsidy, without income limit to parents who purchase day care.  However, existing policy gives no recognition at all to full-time parental child care which, social science shows, is predictably better for young children.[4]  The “Parents Tax Relief Act of 2005” would begin to set things right by granting a tax credit of $250 per month for families that make the financial sacrifice to have one parent serve as the full-time, at-home caregiver for children ages six and under.  On the one hand, this measure creates a level playing field; on the other hand, it expands the child-care choices of all qualifying families.

Second, the infamous “marriage penalty” remains alive and well.  The tax cut of 2001 removed this penalty only for the 15 percent tax bracket.  The “marriage penalty” still afflicts the majority of Americans affected by the middle and high tax brackets.  Today’s new bill would fully eliminate this penalty by making all tax brackets twice as wide for married couples, as compared to singles.

Third, the per-child tax relief provided by the existing personal exemption and the child tax credit are inadequate, well below the relief delivered by the exemplary, pro-child Tax Reform of 1948. Today’s bill would raise the personal exemption for children to $5,000 and would make permanent the $1,000 per child tax credit and index it to inflation in order to protect its future value.

Reflecting old assumptions about the need for industrial centralization, federal tax policy still favors large central offices and factories over market labor in the home. This bill would simplify and expand the availability of the deduction for business use of the home and also encourage telecommuting.  These are progressive ideas designed to increase family-friendly, home-centered work opportunities in the new information age. 

Finally, the Social Security system fails to recognize the full-time care of small children as real work (even the existing “homemakers” pension has no linkage to children).  This is troubling, for there is strong evidence that existing incentives within Social Security discourage the birth of children,[5] while such new children are in fact needed to maintain the system in the future. Today’s bill boldly faces this problem by granting employment credit toward future Social Security benefits to those parents who make the sacrifices to raise their children, full-time, at home. 

Near the end of his Presidency, Ronald Reagan said:

[T]he family is the bedrock of our nation, but it is also the engine that gives our country life....It’s for our families that we work and labor, so that we can join together around the dinner table, bring our children up the right way, care for our parents, and reach out to those less fortunate.  It is the power of the family that holds the Nation together, that gives America her conscience, and that serves as the cradle of our country’s soul.[6]

Today, Senator Brownback, Representative Terry, and their colleagues here lead the way to a rekindling of that spirit.  They transform pro-family rhetoric into policy ideas that can make a real difference for American families.  I am most grateful to them and, as our Nation’s Founders would have said, I wish them Godspeed.

Endnotes:

1 Address delivered at the New York State Fair, Syracuse, September 7, 1903; in Presidential Addresses and State Papers of Theodore Roosevelt.  Part Two (New York: P.F. Collier and Son), [1904]): 479, 493.

2 The Works of Theodore Roosevelt: Memorial Edition, Vol. XXII (New York: Charles Scribner’s Sons, 1924): 592.

3 See: Leslie Whittington, “Taxes and the Family: The Impact of the Tax Exemption for Dependents on Marital Fertility,” Demography 29 (May 1992): 200-21; and Allan Carlson, “Taxing the Family: An American Version of Paradise Lost?” Family Policy Review 1 (Spring 2003): 1-20.

4 See: “The Child-Care ‘Crisis’ and Its Remedies,” Family Policy Review 1 (Fall 2003): 1-159.

5 See: Charles F. Hohm, et al, “A Reappraisal of the Social Security-Fertility Hypothesis: A Bidirectional Approach,” The Social Science Journal 23 (1986): 163; Isaac Ehrlich and Francis T. Lui, “Social Security, the Family, and Economic Growth,” Economic Inquiry 36 (July 1998): 404; and Allan Carlson, “Making Social Security Reform Family Friendly,” a Family Policy Lecture for the Family Research Council, February 23, 2005.

6 “Remarks at a Luncheon with Community Leaders in Chicago, Illinois, September 30, 1988,” in Public Papers of the Presidents: Ronald Reagan, 1988-89 (Washington, DC: Government Printing Office, 1989): 1252.