Love is in the air today and it’s no surprise that Valentine’s Day will spark a December baby boom.
For many industrialized nations including the U.S. though, chocolates, jewelry, and flowers aren’t enough to stem the tide of falling birth rates.
Hungary thinks it may have a good strategy to boost its birth rates: eliminate income taxes for moms.
Last year, our national birth rate fell to its lowest level in 30 years but we're not alone. Hungarian women will deliver an average of 1.45 kids during their lifetimes, below the 2.1 needed to be sustainable.
The country's prime minister announced what he considers a pro-family plan that includes a mix of tax cuts and increased spending to reverse the trend.
It begins with a lifetime of income tax freedom for mothers of four or more kids.
Some other perks? Support for those buying large passenger vehicles, loan and mortgage relief for parents with multiple children, more nursery schools, and even paying grandparents to watch their grandkids.
Prime Minister Victor Orban explained:
“In all of Europe there are fewer and fewer children, and the answer of the West to this is migration. They want as many migrants to enter as they are missing kids, so that the numbers will add up.
“We Hungarians have a different way of thinking. Instead of just numbers, we want Hungarian children. Migration for us is surrender.”
His sentiment around migration may be stronger than critics like but there’s nothing wrong with wanting to boost fertility rates in the nation but encouraging citizens to have more children.
The question is whether more government spending on social programs like paying grandparents to be nannies will yield results beyond expanding the size of government.
Will it work? Maybe.
Other countries which have tried similar programs have reportedly experienced short-term bumps in fertility, but hey weren't necessarily sustained.
A core issue here is the impact on families of women in the workforce over the past few decades. It’s been a wonderful development as women gain greater (economic) independence. However, women are starting families at older ages and having fewer children. Economic downturns and changes to social norms add to the declining fertility rate in the U.S. and abroad.
We need solutions that support working moms and families. Expanding access to paid time off to have kids is a hot issue here. IWF is proud to put forward policy ideas such as our Social Security earned leave plan. Our idea doesn’t expand the size of government or impose new taxes or mandates on the private sector that leads to negative consequences on women and younger workers.
As nations grapple with how to encourage having families, it will be important to see how successful such family-oriented plans perform.