Your bouncing deduction?


In the United States, when you have more children, your taxes go down. For each dependent member of your family, you get a deduction, thereby lowering your taxes. Some argue that this wrongly encourages people to have children; others believe that it's only fair to lower a family's taxes in return for the future taxes the child will pay.

Australia currently has a "baby bonus," under which a family may receive up to A$4,000 per year for dependent children under the age of 5. This is similar to the "earned income credit" in the U.S., under which lower income families may be entitled to receive a refundable income tax credit for each dependent child.

A medical expert in Australia is proposing that the government do the exact opposite. Professor Barry Walters thinks that the government should charge a family A$5,000 (US$ 5,700) for each child they have after a proposed limit of two. And for child numbers three and above, Walters says the parents should have to pay an annual tax of A$800 for life.