Income Tax and Fertility Essay

698 Words3 Pages
Proposition of Complex Tax Reform Improving Fertility Decreasing birth rate and its consequences in sustainable economy is a most hitting debate topic in most of the developing and developed countries. Some studies believe that tax mechanism can impact the decisions of having children directly; therefore unpleasant tax system decreases the number of children. Janusz Kudla presented a model to assess the possibility of increasing the number of children in families with various kinds of subsidies and tax instruments. The conclusions of the model became the basis for further considerations, defining the directions of the tax system reform stimulating increase of fertility rate. Janusz Kudla also stated that the subsidizing policy is better than other types of tax policies and linear taxation is not so effective instrument for improving fertility. It is interconnected that the fertility rate regulation might be a problem for future labor market and establishment of wealthy economic regime. To propose the tax instruments to make changes in fertility rate in Poland author constructed economic model that measures the tax impact on child bearing in two forms. Two factors likewise income and the number of children showing the long run consequences. In which, the number of children can be altered to get short run solution. The assumptions made by model for tax instrument can impact the willingness of bearing children directly and the family maximizes its consumption after expenses on children. Among the many factors affecting child bearing, this financial factor seems to be less important but it is obvious that increasing family member can increase financial cost and somehow benefit as well. Author only measured the financial costs of child bearing those can be expressed in monetary form. Effectiveness of financial support for getting more babies will be low if other

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