Taxing Children: The Re-distributive Role of Child Benefits - Revisited
CESifo, Munich, 2010
CESifo Working Paper No. 2970
![](https://cesifo.org/DocImg/cesifo1_wp2970.jpg?c=1689236930)
In this paper, we challenge the conventional wisdom that due to the negative correlation between family size and earning ability, family size can be used as a 'tagging' device, and calls for subsidizing children (via child allowances) to enhance egalitarian objectives. We show that the case for subsidizing children crucially hinges on child allowances being provided on a universal basis. Notably, when child benefits are means-tested, taxing children at the margin (namely, setting the total benefits to decline with the number of children) is socially optimal.
Public Finance