Pregnancy Coverage and Child Tax Credits

Pregnancy Coverage and Child Tax Credits
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This morning we feature a piece from the LA Times making the case for universal pregnancy coverage. Meanwhile, my old colleagues at National Review have a piece from AEI's James Pethokoukis about Sen. Mike Lee's new tax plan, which would hike the child tax credit by $2,500. The extra $2,500 is applicable to payroll taxes in addition to income taxes, but it's not fully refundable.

Conservative critics have lambasted Obamacare's requirement that all insurance plans, even those for men, cover pregnancy. By contrast, a lot of conservatives have advocated an expanded child tax credit. But aren't these policies rather similar?

The idea behind an expanded child tax credit goes like this: Our entitlement programs tax the young to pay for the benefits of the old, instead of having each child support his or her own parents. They have, in effect, partly socialized the benefits of having children -- turning the act of raising kids into a contribution to the future health of Social Security, etc. Therefore, raising children should count as one form of paying taxes, and upping the child tax credit would merely accurately reflect the contributions parents make.

To be sure, there's a debate even within the right about this. The Wall Street Journal isn't a fan. Some say the argument fails to take into account the fact that children draw from entitlement programs in addition to contributing to them, a problem addressed here by one of the leading advocates of raising the credit.

Another issue is that, while the credits in Lee's plan are not refundable, the logic above strongly suggests that they should be. If raising children counts as a tax contribution, and if someone's required tax contribution is less than they contributed by raising kids, they should get the extra back, just as they'd get the extra back if they overpaid in any other way. (Though because some parents rely on government benefits to pay for childrearing, those benefits would need to be reduced or subtracted from the refundable amount.) Advocates of the credit sometimes get around this objection by saying some parents contribute to entitlement programs "twice" -- through taxes and children -- while parents who don't pay taxes contribute only "once," but tax contributions are typically measured in dollars, not in the number of taxes paid. Further, childless non-taxpayers don't contribute at all, which creates the same disparity with non-taxpayer parents that the expanded credit seeks to address between taxpaying parents and taxpaying non-parents.

At any rate, an expanded credit is very popular with many on the right -- and there's a case to be made that these conservatives should support mandatory pregnancy coverage, too. To a small extent, it accomplishes through insurance coverage what the child credit accomplishes through the tax system.

When all health plans have to cover a specific thing, the plans basically serve as a way of socializing the costs of that thing. So who wins and who loses when we socialize the cost of pregnancy?

The most aggressive critics suggest that the policy subsidizes women at the cost of men, but this isn't quite right. 60 percent of American children are born to a married couple -- in these cases, men share in the added cost of pregnancy no matter what. Either these couples can pay a lot extra for the woman's coverage (or pay for the pregnancy out of pocket), or they can pay a little extra for both parents' coverage over the course of a lifetime. Certainly, unmarried fathers will end up paying for pregnancy when they might not have otherwise, but it's hard to get too upset about that.

The major redistribution here, instead, is from the childless to parents of both genders. People who don't have kids pay for pregnancy without ever benefiting from the coverage, and people who have more kids benefit more than people who have fewer kids.

Aside from the fact that it helps all parents, instead of just those who are wealthy enough to benefit from an expanded tax credit, that sounds a whole lot like the child tax credit to me.

Robert VerBruggen is editor of RealClearPolicy. Twitter: @RAVerBruggen

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