pull down to refresh

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.