<p>“What is this big chunk of money you refer to that will have to be paid”</p>
<p>You were the one talking about tax credits. And it would have to be a healthy one to entice people to stay home instead of working.</p>
<p>I recall recently hearing about a study, that women were having a hard time finding mates of similar education levels. That many were now settling for a “guy that would do the dishes and had a cute butt”. Apparently the lopsided college graduation rate is catching up to us.</p>
<p>Non-refundable tax credits are not “payments” to taxpayers. They are reductions in tax liability on their own income.</p>
<p>We already offer a child care tax credit for working parents who pay for child care. We don’t offer them to parents who care for their own children. Why not? The current policy appears to encourage parents to work.</p>
<p>Without more information, I don’t think one can conclude that the cost of incentivizing one parent to stay home would outweigh the cost of putting millions of unemployed people back to work. It makes sense to me that it would not, but that is speculation on my part.</p>
<p>“Optimal” meant from an overall macroeconomic point of view, not an individual household point of view.</p>
<p>In any case getting back into the work force after several years out of the work force is very difficult, given the attitudes that employers have with respect to the long term unemployed. So someone who takes years off to raise children may have a hard time returning to the work force later at a high skill job.</p>
<p>Who is going to pay for the tax credit? Even with a tax credit, most families probably still need to have to have the couple working. Wealthier families won’t and many families have only one parent working. Are you going to give these families a tax credit to do what they were going to do anyway?</p>
<p>What do you mean by, “who is going to pay for the tax credit?” The credit is paid out of the reduction in one’s own tax liability.</p>
<p>Tax credits usually phase out by income level, so wealthy families probably wouldn’t get them anyway. Actually, there probably isn’t a way to monetarily incentivize wealthy two-earner parents to stay home. Maybe a campaign to guilt them into doing their duty to society by having lots of children will do it. Better yet, flatter them into it, by publicizing the <em>superior</em> quality of their potential offspring. :)</p>
<p>High marginal tax rates, which hit the first dollar of earnings of the lower-earning spouse, discourage work. This year’s increase of the top marginal rate to 39.6% will encourage some spouses to work less or not at all. Arthur Laffer himself writes in the book “The End of Prosperity” p113 that the Reagan tax cuts (lowering the top marginal rate from 70% when he took office to 28% when he left) “encouraged work, especially among married women, who tended to be the biggest victims of high tax rates because their earnings, which came on top of their husbands’ earnings, were taxed at a high marginal rate.” I favor low marginal rates anyway.</p>
<p>Tax credits cost money. If you give 10 million people 5,000 dollars…that is 50 billion dollars. Tax receipts may not drop 50 billion because of multiplier affects, but tax revenue is going to drop overall and the government is going to receive less money. What groups of people are going to pay more to cover the shortage of government revenue?</p>
<p>…and so? You mean government might have to spend less, and shrink? Horrors.</p>
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<p>Not necessarily anyone. If everyone is employed (other than stay home parent-spouses), then fewer government services and programs are needed, and there may be no shortage.</p>
<p>Arthur Laffer made up his shtick. Check history. He doesn’t know when tax rates are too low and revenue to the government decreases.</p>
<p>But many former budget directors, or people that worked on the budget, and who worked under republican presidents like Stockman and Bartlett, I am sure there are others, said revenues were short after tax cuts.</p>
<p>There is also no proof that there is a material difference in the work force with the income tax rates we have now compared to where they were last year. History says the opposite. </p>
<p>I do believe in some of what Laffer says. I think there is a curve. Tax rates of 90 percent, if there weren’t a lot of deductions would probably be a problem.</p>
<p>Tax rates of 10 percent and they go to 15 percent, people aren’t going to quit their jobs.
The problem with continuing cutting tax rates is context. You cut the rates from 90 percent to 70 percent…yeah…I think that helps. You cut rates from 70 percent to 50 percent, I think that is a positive incentive to work.</p>
<p>You cut the rates from 39.5 percent to 35 percent, that is just a gift. You are not going to get a huge change of behavior on that. And raising the rates back up, you aren’t going to get a change in behavior from that either.</p>
<p>Taxes were raised how many times under Reagan?</p>
<p>" tax revenue is going to drop overall and the government is going to receive less money.
…and so? You mean government might have to spend less, and shrink? Horrors."</p>
<p>Right. Theoretically. Reality is government is not cut under anybody.</p>
<p>But let’s pretend. When government spends less some groups get less. Which groups are going to get less? Defense?</p>
<p>Yes, but outsourcing is a different issue. </p>
<p>TechCrunch is talking about Peak Jobs as the condition where technological progress eliminates jobs faster than it creates them. Clearly that hasnt been the case in the past- the Industrial Revolution eliminated tons of farm jobs but created even more coal/shipping/steel mill jobs. </p>
<p>Today’s First-Time Unemployment Claims were interesting along with the other big labor number. Claims went up 38K but December wages were 2.6% higher. So that means that the labor supply is tight in certain areas but weak in others.</p>
<p>Vouchers would mainly be a subsidy for those who already send their kids to private schools, as private school tuition is generally significantly higher than a voucher would contribute if it is based on the amount the state government spends per student in public schools.</p>
<p>The cheapest private schools tend to be the religious ones, but they are not necessarily suitable for those of other religions, and not necessarily great academically. Non-sectarian private schools whose attraction is primarily academic tend to be much more expensive than public schools.</p>
<p>Jumping in late- Bay my old boss felt that having a second earner in the majority of families is what pushed up the prices of cars and homes. He may have been correct. Wage growth has been stagnant for years and the only real income growth for families was an additional wage earner. With most families now having 2 people working there may not be wage or income growth for most of us. Prices will have to be impacted.</p>
Better yet, flatter them into it, by publicizing the <em>superior</em> quality of their potential offspring.