Would you have more kids if that meant zero taxes?

medium119746674Hungary really wants babies. Lots of them. So, it is ready to abolish taxes for women, until they turn 30, if they have even one child. And if they have two or more kids, they will never have to pay taxes. Ever.The bill with this expanded exemption (women with four or more children were already eligible) has been sent to their parliament this week, Hungarian prime minister Viktor Orbán has said this plan will create the “world’s largest family-centred economy”, and Elon Musk has called it a “good idea”.Hungary’s population has been shrinking since 1980 (except a small bump after the Covid-19 pandemic) — and is back to the 1950s levels now. Since the 1960s, it has tried family allowances, long paid parental leaves, free daycare, housing benefits, subsidies for things children consume — under socialist governments and conservative ones — but nothing has worked. The fertility rate is still less than 1.5. Orbán, who has led Hungary since 2010, said in his 2025 state-of-the-nation address that he is “convinced that more children are born if mothers feel financially safe.” Perhaps.What have governments offered in exchange for more babies?Greece has been trying that too — with €20bn set aside for a decade-long plan, with tax breaks and cash incentives, to encourage people to have more children. The US could increase tax breaks for those with children because the bill underlying it expires at the end of 2025 — US president Donald Trump has anyway said he wants a “baby boom”. South Korea, which has the world’s lowest fertility rates, believes it’s not tax breaks but cash incentives that hold the solution — it has spent $270bn in less than two decades to promote childbirth. China, where marriage rates went through a record drop in 2024, has just offered free preschool and childcare subsidies to make its people have more children. Turkey expects maternity allowances to go up this year because it has promised more incentives. And Russia is offering college students 100,000 roubles if they have babies (and has banned what it calls “child-free propaganda”). It’s the age of baby bonuses. Wherever you look, desperate governments are throwing money at falling fertility rates to hold on to an idea of the ideal population growth — that buzzy 2.1 replacement rate, in which two kids replace their two parents and the extra “.1” acts as an insurance against the uncertainty of death. And why not? In 1975, there were 30 countries with below-replacement fertility. Today, there are 130. But historically, financial incentives to raise birth rates have not been too successful in the long run. Canada introduced a tax exemption in 1987, which became a tax credit the following year, if people had children. Fertility rates picked up marginally for five years, and then dropped again. Likewise, Hungary started offering subsidies for new homes in 2015, based on how many children a couple had. Over the next few years, loans got easier for those with kids, and then the tax breaks we’ve already spoken about. Fertility rates, meanwhile, went up in 2012, before the housing subsidies started, and continued till 2021, before dropping again. !function(){"use strict";window.addEventListener("message",(function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r,i=0;r=e[i];i++)if(r.contentWindow===a.source){var d=a.data["datawrapper-height"][t]+"px";r.style.height=d}}}))}(); But why have they failed?The strength of any long-term promise lies in whether someone believes it can be kept. Policies like tax breaks and cash incentives are entirely political. What if a government promises a lifetime of no taxes, you have three kids, and then another government comes in and says they don’t actually have the money to keep exempting you? Australia, for instance, launched a generous cash incentive in 2004 for anyone who gave birth to a child. The payout was increased in 2006, and then again in 2008. But economic pragmatism caught up, the money to be paid was reduced in 2013, before being scrapped altogether in 2014. That’s one part. But the more important reason that men in government offices might lose sight of is the fact that childbearing is a deeply emotional commitment. It is what American philosopher LA Paul called a “transformative experience” — you can’t know how it’ll go until you experience it, but it changes who you are and there’s no going back to who you were before you did it.While it’s truly not possible, or even right, to draw large conclusions about how people feel, some indications of what people prioritise in their lives can help with government policy.For more than four decades, a Swedish non-profit has been publishing data on how people’s beliefs, values and motivations are changing across the world. It’s called the World Values Survey. Of the hundreds of questions they have asked people across more than 100 countries (including India) since 1981, six are relevant to our story. Not every question was asked in each country, and not every country was included in every round. But cultural dynamics are shaped gradually, over years, and the effects of a change that started taking place, maybe, two decades ago would only start showing now.Their data tell us three things that debunks some of the repeated arguments about why people are having fewer children. One, the faith in marriage as an institution didn’t get weaker and there are very few people who want no kids. !function(){"use strict";window.addEventListener("message",(function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r,i=0;r=e[i];i++)if(r.contentWindow===a.source){var d=a.data["datawrapper-height"][t]+"px";r.style.height=d}}}))}(); !function(){"use strict";window.addEventListener("message",(function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r,i=0;r=e[i];i++)if(r.contentWindow===a.source){var d=a.data["datawrapper-height"][t]+"px";r.style.height=d}}}))}(); Two, a lot of people do believe that women want to have children. !function(){"use strict";window.addEventListener("message",(function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r,i=0;r=e[i];i++)if(r.contentWindow===a.source){var d=a.data["datawrapper-height"][t]+"px";r.style.height=d}}}))}(); !function(){"use strict";window.addEventListener("message",(function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r,i=0;r=e[i];i++)if(r.contentWindow===a.source){var d=a.data["datawrapper-height"][t]+"px";r.style.height=d}}}))}(); And three, they don’t think having and raising kids should feel like an obligation. !function(){"use strict";window.addEventListener("message",(function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r,i=0;r=e[i];i++)if(r.contentWindow===a.source){var d=a.data["datawrapper-height"][t]+"px";r.style.height=d}}}))}(); !function(){"use strict";window.addEventListener("message",(function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r,i=0;r=e[i];i++)if(r.contentWindow===a.source){var d=a.data["datawrapper-height"][t]+"px";r.style.height=d}}}))}(); So, where governments are right is in believing that many people do want kids — somewhere deep down. Where they’re wrong is in identifying the trigger for someone to decide to have a kid — a payoff or a sense of nationalistic duty. Because it’s about how someone feels about having a child, which cannot be a quid pro quo agreement with the government. It’s not that people have stopped having kidsBarring South Korea, Taiwan, Singapore and Ukraine, fertility rates have not dropped below 1 anywhere. Which means each woman is having, on an average, at least one child. And people are not turning away from marriage either. They’re just doing it later. Across the world, about 58% of women in their early 20s used to be married in 1990. Now, about 44% are. But among those in their early 40s, about 87% used to be married in 1990. And now, more than 84% are.Besides, the world’s average fertility rate is expected to drop below replacement by 2050, which is still 25 years away. And global population drop isn’t expected until 2085, which was supposed to be the goal all along for decades anyway. So, why the panic?Some demographers have put it down to a fear about where the decline is taking place — the rich, shiny parts of the world. Because there are still 107 territories where the fertility rate is above replacement levels — they just happen to be largely in the poorer parts of the world. If we go over fertility data again, by national income levels, it’s only the high and upper-middle income nations where fertility rates are below replacement. !function(){"use strict";window.addEventListener("message",(function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r,i=0;r=e[i];i++)if(r.contentWindow===a.source){var d=a.data["datawrapper-height"][t]+"px";r.style.height=d}}}))}(); Is that why many countries that are offering the most compelling cash incentives now also happen to be those with strong anti-immigrant rhetoric? South Korea has never been too welcoming. Russia, at the moment, certainly isn’t. And so isn’t China. The US is shutting down its borders faster than geopolitical analysts can keep up with. Greece, which used to be open to migrants, has been increasingly anti-immigrant in recent times.And since Orbán only wants “Hungarian children”, opening up its borders to allow more immigration has not been an option — “this is a risk that must not be taken,” he has said. Migrant labour has been the foundation of global economics for all of human history. In its absence, a payout for citizens seems like the only — slightly misplaced — solution. And we didn’t even get into whether governments have the resources to sustain these incentives.