Should the Tax Code Subsidize Families?

A controversial proposal suggests that tax laws should give more support to those with children. Do you think it's fair?

Apr 13, 2014 at 11:50AM

Raising children is an expensive undertaking, with some estimates putting the total cost of raising a child at $300,000 or more. But a controversial proposal that would give parents tax breaks at the expense of those who choose not to have children has sparked intense debate about the role of the tax laws in providing financial support to families with children.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, takes a critical look at the proposal. Dan notes that the argument in favor of the proposal is that raising kids involves extra expenses that non-parents don't have to pay, and so making non-parents who earn above the median household income pay more in taxes essentially makes economic prospects more even. Yet Dan points out that past attempts to provide tax subsidies to encourage certain activities hasn't always worked out well, noting the role of tax incentives in the savings and loan crisis of the late 1970s and 1980s. Even today, tax-favored vehicles have come under fire, with Kinder Morgan Energy Partners (NYSE:KMP) and similar master limited partnerships, Annaly Capital (NYSE:NLY) and other real-estate investment trusts, and Prospect Capital (NASDAQ:PSEC) and its business development company peers being seen by some as tax-motivated enterprises that have resulted in overinvestment in their respective areas. Dan concludes that with tax incentives for families already in place, further moves would make the decision to have a family too economically motivated.

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Dan Caplinger and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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