Check out RealClearPolicy editor Robert VerBruggen‘s latest column, and you’ll encounter a range of right-of-center responses to President Obama’s notion of boosting tax relief for working parents who pay for child care.
I actually agree with [Josh] Barro and [John C.] Goodman that dual-earner couples should not be taxed as much as single-earner couples with the same income. But the best argument for this proposition stems from basic fairness, not some broad principle that work we do for ourselves should be treated exactly like work we do for pay.
Barro concedes that comprehensive “efforts by the government to measure how productive we are at home would be intrusive and inaccurate, not to mention politically toxic.” But it goes beyond that: Even if we could overcome the political difficulties and find an accurate way of tallying up this work, we usually shouldn’t tax it.
Why? Think through a few of the implications. You have to send a check to the government if you spend the day cleaning, but not if you spend the day sleeping. If you mow your lawn more often than your bad neighbor does, you pay more in taxes than he does. If you’re unemployed and use your time to fix the sink, you owe taxes on that value — we wouldn’t want to treat you differently than we’d treat someone who can afford a plumber, but we do want to make sure you’re taxed more than an unemployed person who sits around playing video games. And if one stay-at-home mom teaches her kids the alphabet while another has them watch TV, the first mom pays more in taxes. After all, higher-quality child care is worth more.
To be sure — and here’s what makes this idea attractive to economists — these problems are present to some degree with the income tax too. You don’t owe it if you don’t bother to work, and the more and higher-quality work you do, the more you owe.
But there are key differences. First, in addition to reflecting the effort each person puts in, income taxes target the various ways that luck contributes to our fortunes, giving some people higher intelligence, better connected parents, and so on, than others. Home-productivity taxes may capture some of this (some die-hard do-it-yourselfers are inherently capable of doing things the rest of us are not), but in general they’re just taxing people who take pride in their homes over people who don’t, and they might even be regressive, seeing as the poor rarely hire maids or gardeners.
Further, the incentive effects of income and home-productivity taxes could be quite different; it’s hard to predict how much DIY lawn-mowing wouldn’t get done if DIY lawn-mowing were taxed, but there’s no reason to assume it’s the same reduction that’s caused by the taxes on professional lawn-mowers. I sure wouldn’t mind an extra excuse as to why I didn’t do my share of the chores around the house.
Follow the “column” link above to read arguments from Barro and Goodman, along with a different viewpoint from Ramesh Ponnuru.
