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The Problem Everyone Misses

Every pronatalist policy focuses on parents: child tax credits, parental leave, childcare subsidies. They're all failing. Fertility keeps dropping despite billions in spending.
Why? Because we're incentivizing the wrong generation.
The real problem: Elderly wealth is locked up in the hands of people with no skin in the demographic game. Your pension depends on other people's children existing, but you have zero financial incentive to ensure those children are born.

The Incentive Misalignment

  • Elderly need: Younger workers to fund pensions and maintain asset values
  • Young adults face: Crushing tax burdens and no wealth, making family formation impossible
  • Result: Fewer children → higher per-capita tax burden → even fewer children → pension insolvency
The people who most need demographic renewal (retirees) have no reason to support it. The people creating demographic renewal (parents) have no resources.

The Solution: Grandchild Tax Relief

Core mechanism: Reduce income tax and capital gains tax for elderly based on number of grandchildren under 18 residing in-country.
Grandchildren can be:
  • Biological descendants, OR
  • Connected through Formalized Inheritance Structure (FIS)

What's an FIS?

A standardized legal vehicle (think: government-recognized trust template) where:
  • Elderly person transfers assets to trust benefiting a family with children
  • Grantor retains emergency access
  • Clawback rule: Withdraw assets = repay all accumulated tax relief
  • Clear, unambiguous estate disposition recognized by tax authorities
Not literal adoption - just a formal way to commit inheritance to families with kids.

Why This Actually Works

1. Creates Bilateral Incentives

  • Elderly: Want tax breaks → need connections to families with kids → support family formation
  • Young families: Want inheritance security → build relationships with elderly → have more children with greater certainty

2. Self-Regulating System

  • Grandchildren age out at 18 → lose tax benefit unless you add another family
  • Can "adopt" multiple families → spreads wealth wider (even better for policy goals)
  • Clawback prevents rug-pulls
  • The younger the grandchildren when you start, the longer you benefit

3. Solves the Coordination Problem

Currently: Each elderly person benefits from hoarding wealth, but collectively they suffer from demographic collapse (pension insolvency, labor shortage, declining asset values).
This policy: Makes individual demographic contribution financially beneficial. Aligns private and social incentives.

4. Breaks the Inheritocracy Without Confiscation

Instead of punitive wealth taxes (political non-starter), this rewards inclusive inheritance. Progressive wealth redistribution through positive incentives.

5. Market Price Discovery for Demographics

Creates a price signal for demographic contribution. How much is a grandchild worth? Currently undefined → under-provision. This policy makes the value explicit.

The Residency Twist

Critical rule: Only grandchildren residing in-country count.
This creates fascinating pressure:
  • Your adult children moved abroad with the grandkids? No tax break.
  • Now you have a choice: convince them to return, OR disinherit them and find a local family with children
  • Creates credible threat: "Bring the grandchildren home or I'll give my estate to the neighbor's kids"
This isn't about xenophobia - it's about ensuring the policy fixes your country's demographic crisis, not someone else's.

Gaming & Loopholes - Can You Break It?

Scenario 1: "I'll just adopt a family with 5 kids under 18, get tax breaks for 10 years, then pull the assets out before I die"
Answer: Clawback. You repay every penny of tax relief you received. Plus you lose community support in your old age. Plus you need to maintain the same number of grandchildren or more to avoid clawback - so you'd need to find another family immediately.
Scenario 2: "Old person adopts my family, I support them for years, then they re-introduce their estranged biological children into the will at end of life"
Answer: This happens in regular inheritance already. It's messy but not unique to this policy. Could require FIS modifications to have minimum notice periods or proportional distribution rules, but inheritance disputes exist regardless.
Scenario 3: "Rich person adopts 20 families, spreads wealth thin, everyone gets less"
Answer: That's a feature, not a bug. More families getting inheritance = more demographic support = policy success. The tax relief still costs the same whether it's 1 family getting 100% or 20 families getting 5% each.
Scenario 4: "Someone adopts families, then withdraws assets for 'emergencies' repeatedly"
Answer: Clawback accumulates. After several years of tax relief, the clawback becomes painful. Plus you need to immediately establish a new FIS with equal or more grandchildren to avoid the clawback.
Scenario 5: "Elderly person with no biological grandchildren pays young family to have more kids just for tax break"
Answer: THAT'S LITERALLY THE POINT. That's exactly what we want - elderly wealth flowing to families having children. Whether it's transactional or genuine affection is irrelevant.

Implementation: Simple, Not Easy

  • Standardized FIS trust templates (like standardized mortgage forms)
  • Government registry for tax authority verification
  • Birth certificates + residency proof for grandchildren
  • Clear clawback calculation formula

Tax Relief Scale (Example)

  • 5-10% income tax reduction per grandchild (details negotiable)
  • Apply to: retirement income, pension drawdowns, capital gains on asset disposals
  • Potential cap at 50% reduction
  • Scales linearly - 6 grandchildren = 6x the benefit of 1

Political Path

Multi-coalition appeal:
  • Fiscal conservatives: Fixes pension Ponzi math, no new spending, market-based solution
  • Social conservatives: Rebuilds extended families and community
  • Progressives: Breaks inheritocracy, redistributes wealth to families with children
  • Libertarians: Voluntary, incentive-based, no mandates

Transition

  • Allow retrospective FIS establishment (existing grandparents get credit immediately)
  • Grace period for childless elderly to find families
  • Public education: "adopt" a family, secure your legacy

Why Tax Breaks for Parents Don't Work

Child tax credits and benefits:
  • One-time payment or annual small amount
  • Doesn't solve the certainty problem - young adults don't know if they'll have resources in 5-10 years
  • Doesn't align elderly interests with demographic outcomes
  • Funded by... current workers, creating more tax burden on the young
This policy:
  • Creates long-term financial relationships between generations
  • Gives young families certainty about future inheritance
  • Makes elderly people care about fertility personally and financially
  • Self-funding through tax relief, not new spending
  • Unlocks trapped elderly wealth for productive demographic use

The Uncomfortable Truth

If you're elderly with no grandchildren, you're asking other people's children to:
  • Fund your pension
  • Provide your healthcare
  • Maintain your asset values
  • Staff your nursing homes
While contributing nothing to ensuring those children exist.
This policy makes that externality explicit and correctable.
You want a pension? Invest in grandchildren - yours or someone else's.

Why This Is Obvious in Hindsight

Pension systems are intergenerational wealth transfer schemes. They only work with stable demographics.
Current system: We pretend pensions are individual savings, but they're really young workers paying old workers, sustained by demographic growth.
When demographics collapse, the entire system fails. No amount of automation or productivity growth can replace missing humans.
The insight: If pensions are intergenerational, the tax incentives must be too.

Questions for This Community

  1. What gaming vectors am I missing? Where can this be exploited?
  2. Is the clawback mechanism strong enough? Should there be additional enforcement?
  3. What's the optimal tax relief percentage per grandchild? How do we calculate the break-even?
  4. Should there be a cap on number of "adopted" families? Or is unlimited spreading of wealth actually desirable?
  5. How do we handle blended families/step-grandchildren? Do they count?
  6. Political feasibility: Which country/region could actually pass this? What's the path?
  7. Does the residency requirement create enough pressure to retain citizens? Or is it too weak?
  8. Better name than "Formalized Inheritance Structure"? Needs to be memorable.
  9. Should the FIS allow partial withdrawals for elderly care costs without full clawback? Or is that a loophole?
  10. How does this interact with existing inheritance tax systems? Complement or conflict?

The Bitcoin Parallel

Think of this as Proof-of-Grandchildren.
You want to extract value from the social system (pensions, healthcare, maintained asset values)? Prove you're contributing to that system's sustainability (demographic renewal).
Can't fake it - grandchildren under 18, in-country, verifiable. Can't double-spend - clawback prevents gaming. Incentive-aligned - your benefit scales with your contribution.
Everyone says the demographic crisis needs "creative solutions." This is the obvious one we've been ignoring: Make the generation that controls the wealth care about the generation that's supposed to have the babies.

TL;DR: Tax breaks for elderly based on grandchildren (biological or "adopted" via formal inheritance structure) creates bilateral incentives for intergenerational wealth transfer to families with kids. Fixes pension math, breaks inheritocracy, rebuilds community. Self-regulating via clawback. Makes demographic contribution financially beneficial at individual level.
Pitch in one sentence: Give tax breaks to grandparents instead of parents, and suddenly elderly people have skin in the demographic game.

What am I missing? Where does this break down? Is this politically viable anywhere?
68 sats \ 1 reply \ @k00b 18h
Would you mind sharing the prompt? That's the part I want to read
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I want to create a proposal for a tax break for inheritance planning that is pronatalist.
Basically the more grandchildren you have, genetic or not, the greater your tax break.
A formal structure would be devised to allow high net worth individuals to take advantage of the scheme by adopting parents not genetically related to them, even if they already have children or even grandchildren, thereby spreading their wealth as widely as possible.
The problem of demographic collapse is in part caused by a misalignment between the interests of older people and the interests of young adults and their children. Elderly people need younger people to work more to fund pensions, but this means that younger people have less time and resources to have children, meaning the tax burdens on each generation increase, perpetuating the decrease in children being born.
I want to align the interests of the generations and creates intergenerational dependence. It would be a disaster if a lot of capital were locked up in the retirement savings of people without grandchildren, or even without children.
Help me pitch this, ask me questions about it first.
  1. A combination of income tax break and CGT when an asset is disposed.
  2. Linear probably, but this is a detail that could be worked out later
  3. I don't literally mean adoption, but a formal and uniform model where assets are transferred to a trust in the name of the beneficiaries which the elderly person can access in an emergency, but if they take them out they trigger a claw back from the government of the income tax they didn't pay because they set up this vehicle for inheritance planning. The idea of 'adoption' is just an analogy to pitch the idea. The formal structure is the uniform model for reducing the legal overhead, to make it very clear what should happen to a person's estate after they pass, so it's not sufficient to simply change their will privately. A uniform structure that the tax man recognises removes all room for error and ambiguity.
  4. It's aimed at anyone with assets who pays tax on their retirement income or who draws down their assets in retirement to fund their living expenses. If you own a home and have a state pension but you have no children then by organising your estate so that a family with children will inherit it you'll be given a tax break. This gives families whose parents do not have assets an opportunity to build a relationship with other elderly people in their community for mutual benefits. Some elderly people could disinherit their own children if they don't have children, and earn a tax break giving their wealth to people who do have children.
  5. There is no minimum age that you can be a grandparent. Either you're a grandparent or not. The younger you are when you set this up or when your children have their own children the longer you can avail of the tax break for. But I think the grandchildren need to be under 18. You can't adopt your 70yo neighbour who had 11 children who are all adults now just to avail of the big tax break.
  6. I'm trying to encourage a negotiation between elderly people and young parents around inheritance so that more people in child baring are have certainty about their financial future. Many elderly people are alone and it would be beneficial to them to have adoptive family. Many elderly people who do have grandchildren offer no tangible support to their children, and their children should be about to seek out a new grandparent relationship if they are familiar with a person who can benefit from the tax break. Good intergenerational relationships should be rewarded, where they are genetic or not. It takes a village to both raise a child and care for the elderly. Its very bad for society to have a narrow "inheritocracy" who benefit from increasing asset values even if they don't have any children. This policy would reduce inequality in future generations without directly increasing inheritance taxes. I don't want to increase intergenerational wealth transfer while grandparents are alive, necessarily, but grandparents that help parents with a deposit for a home are likely to benefit because their children will be able to have children sooner, so it encourages them to help out in financial and non-financial ways.
  7. Finding families to 'adopt' is not necessarily part of the policy. It could be someone you know from work, or a neighbour. Young families would be encouraged to get to know elderly neighbours, as would the elderly without any grandchildren be encouraged to meet people around them. But no additional supports are required other than the financial incentive and guidance on the formal structure required for non-genetic inheritance to qualify for the tax break.
  8. All 4 of your pitches are equally valid, I think it's important to pitch it in a different way depending upon the priorities and political biases of the audience.
"This is just a tax dodge for the rich" We offer many tax breaks for behaviour we want to foster. Pensions are paid by the current work force, the entire pension system is built on demographic growth, or at least stability, it cannot rely on the productivity improvements of automation alone. The capital held by elderly people has to provide financial security for the widest possible number of working parents in order to increase the birth rate across the population.
"This commodifies children/families" How is it different to child benefit? Do child benefit payments commodity children?
"This creates perverse incentives for fake relationships" There is nothing fake about inheritance. Even if it's a purely financial arrangement it still spreads wealth out more widely and encourages birth rates. The real relationships it may foster are an ancillary benefit.
Another factor to consider: grandchildren not resident in the country are not counted. The policy can't be used to solve the demographic crisis in some other country. This encourages grandparents to say to their children that they should bring them home. Otherwise they could disinherit them and instead give their wealth to an immigrant family who have plenty of children.
  1. Sunset Clause for Gaming I don't understand what you're saying here. The surrogate grandparent still owns the assets, they can withdraw them from the trust at any time, but then they have to 'adopt' a new family with the same number of children or more to avoid the state clawing back the income taxes they would have paid. But they could also just 'adopt' another family, spreading their wealth out across a wider number of adoptive grandchildren. There is no reason why they have to choose only one family. If course this could be seen as a very manipulative thing to do, to potentially exploit people who support you in your old age only to adopt the whole neighborhood just before you pass away, but I don't think that should be assumed to be a real problem or common occurrence, as it wouldn't obviously benefit the elderly person in any way. I also don't think there is a need for bonuses, given that if you don't have more children the elderly person might be encouraged to 'adopt' another family.
Of course there could be a scam run where elderly parents who disinherit their own children re-introduce them into their inheritance plan at end of life, reducing the inheritance of an adopted family that were manipulated into supporting the elderly person. This, I can imagine it would be something that would need to be adjudicated by a formal system, but I think it can't be avoided. A similar scenario can easily be imagined between biological children, and in fact often occurs, where one child supports the parent but is not duly compensated the will compared to a child that has been estranged. Inheritance is messy, that's unavoidable.
I want to create a post on Stacker.news to get feedback, and then introduce it as an idea in a pronatalist political party that I have joined.
Shorter, punchier format than policy papers The core incentive structure + Potential gaming/loopholes + Political feasibility + Implementation details All of the above Emphasize this as an obvious solution to demographic collapse, that tax breaks for parents is the wrong approach.
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