Taxes

Baby Boom Caused by Tax Code

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The Law of Unintended Consequences rears its hilarious head in unlikely places. The New York Times reports on a rash of women inducing birth in the last week of December to get the $500 child tax credit and other tax boons for the year that's about to end:

Unless you're a cynic, or an economist, I realize you might have trouble believing that the intricacies of the nation's tax code would impinge on something as sacred as the birth of a child. But it appears that you would be wrong.

In the last decade, September has lost its unchallenged status as the time for what we will call National Birth Day, the day with more births than any other. Instead, the big day fell between Christmas and New Year's Day in four of the last seven years — 1997 through 2003 — for which the government has released birth statistics. (The day was in September during the other years; conception still matters.) Based on this year's calendar, there is a good chance that National Birth Day will take place a week from tomorrow, on Thursday, Dec. 28.

So to see if taxes were truly the culprit, Mr. Chandra and another economist, Stacy Dickert-Conlin of Michigan State, devised some clever tests. They found that people who stood to gain the most from the tax breaks were also the ones who gave birth in late December most frequently. When the gains were similar, high-income parents — who, presumably, are more likely to be paying for tax advice — produced more December babies than other parents.

By my calculations, about 5,000 babies, of the 70,000 or so who would otherwise be born during the first week in January, may have their arrival dates accelerated partly for tax reasons.

The article, worth reading in full, is charmingly headlined: "To-Do List: Wrap Gifts. Have Baby. "

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  1. Last year, my wife gave birth on January 5th. Everyone we knew advised us to get the baby induced in December. We even asked the doctor about it, but he said that so many women were getting induced in the last week in December that there was no room at the hospital for us…

    It’s kinds silly – $500 doesn’t mean a whole lot to most people. I think the women are just looking for any excuse to get induced. By nine months, they’ve had enough.

  2. Well, as the wife (my husband’s b-day is 12/26, the worst possible day in the calendar to be born IMHO) mother (Aaron was born on Dec. 23, 2001. Not because of taxes, either.) and daughter (my mother’s b-day is 12/30, the 2nd worst day for a party) of people born in December, I welcome this development. More people to share the misery of trying to have a birthday party the week of Christmas. Good luck finding presents, too.

  3. Good luck finding presents, too.

    Most people with late December b-days I knew always got the shaft when it came to gifts. they would get “combined” gifts or parties that killed both birds with one stone.

  4. My mother always insists on doing something special for Steve — my husband — on his birthday because she got those ‘2fer’ presents all her life. She remembers exactly one birthday party, and everyone gave her socks. Steve said that he can’t even go out to eat on his birthday because everyone is sick from the day before. I bought a giant canvas banner that says “Happy Birthday” which I hang up on the 22nd and leave ’til the 31st. It’s easily the biggest indoor decoration we have other than the Christmas tree.

  5. Am I a cynic because I don’t consider a process that’s happened billions of times* to be “miraculous”?

    *Trillions of times, if we aren’t being too picky about the species under consideration.

  6. D’oh!

    sed s/miraculous/sacred/g

  7. My sister was due on Dec. 28th. She was born on Jan 5th. My father was not happy.

  8. Wow, people are willing to have an induction, and the associated much higher risk of having to have major abdominal surgery, longer labor, as well as far more painful contractions – for $500? That’s… sad. But more power to them, I guess…

  9. .. my birthday is Dec 31st .. just snuck in under the deadline .. Mom swears that Dad took her for a ride on a bumpy dirt road the day before I was born, just to induce ..

    .. my family went to great lengths to ensure that my birthday was kept separate from Xmas.. I’ve heard stories about folks like Karen describes that get their birthdays combined with Xmas .. always thought that was a cop-out ..

    .. btw, I have to say that Dec 31st is just about the best day to have a birthday on .. everyone celebrates!!

    .. Hobbit

  10. Hey Hobbit, I was born on New Years Eve as well, at 9:12 pm which got my parents a tax deduction for the entire year. True enough, they didn’t get a child tax credit as well but, then again, taxes were a hell of a lot less in the days before routine C-sections and induced labor.

    Karen, I’ll put 12-31 up against any day of the year in the WORST DAY TO BE BORN contest. As a kid, everyone is burned out on the holidays and just plain forgets little Mikey’s birthday. And just try to get someone to come to a birthday party on New Years Eve. Well, okay, if you frame it right, sometimes they’ll come. Free booze is popular.

    Actually, the worst birthday is probably Christmas. Oh, and this is an Xmas AND birthday gift for Johnny. Although, anytime near Christmas is problematic I suppose.

    Jimmy Buffet was born on Christmas and his mom reportedly demanded two gifts for her young Son of a Son of a Sailor.

  11. everyone celebrates!!

    That’s right, everyone in the entire world celebrates our birthday.

    Mrs TWC goes to great lengths to keep my birthday separate from Christmas and I genuinely appreciate it.

  12. I never thought of it being difficult to find presents after Xmas, I mean, isn’t that when all the Half-Off-Everything After Christmas Sales are? Maybe there’s more of that out here in Sunny Californicate.

  13. I have a friend that is Greek Orthodox so they do Christmas in January. She always shops the after Christmas sales. Well, after December 25th Christmas sales that is.

    You’d think I could get more of this into one comment, eh?

    TWC

  14. TWC, Aaron’s due date was Dec. 26. I went to the doctor on the 21st and was told nothing was going to happen for at least a week, meaning we’d likely be there on New Year’s Eve. So, I had an extra week. Now, Austin has this city-sponsored Christmas display called the Trail of Lights in our big park every year. (They have lighted sculptures sponsored by local businesses, including a Nativity and a Menorah.) It’s about a one mile walk. Steve and I decided to take our older son to the Trail, as kind of a last only-child thing before the Interloper arrived. I went into labor while we were walking, about halfway through. I willed myself to complete the circuit, get back to the car and drive home before telling him we needed to go to the hospital. I simply couldn’t stand the thought of being featured in a “Woman Gives Birth Near Nativity Scene” newspaper story.

  15. I also realize that my story about Aaron’s arrival has nothing whatever to do with anything at this website.

  16. The added value of having a child before Jan 1st is the advantage of getting your tax break now instead of 18 years from now. If we assume a 10% discount rate, then the “decision” (luck) of having the baby earlier has a NPV of $2500. In other words $500 today is worth $3000 in 18 years.

  17. Karen, Aaron may not be Germaine–but it’s really a great story. And funny.

    And it occurs to me that I’m going to have a niece on December 26th. It’s not a tax decision it’s a health issue and it’s scheduled. Unless Mrs TWC’s twin sister has the baby between now and then.

  18. sorry, OT post…

    Hey Karen happy birthday to your son! I was born on Dec. 23 also. My parents always kept my birthday and Christmas separate. My boyfriend’s father was born on Christmas Eve, and his niece on Jan. 2, so we have a lot to celebrate. My family and BF always make sure his dad’s, his niece’s, and my birthday are acknowledged rather than wrapped up in Christmas.

    Actually, I always rather enjoyed having my birthday so close to what I consider the major holiday of the year. I love winter, and it was great reason for friends to take me skiing, or go drinking, look at Christmas lights and play in the snow (in the years when we would get snow).

    I will never forget one birthday party my mom threw for me, the year I turned 12. There were about 15 girls gathered in my living room for games and cake the Saturday before Christmas. In my town, Santa used to come around on a fire truck and hand out candy to the neigborhood kids. The look on Santa’s face when 15 screaming little girls ran out of the front door of my house was priceless. I will never forget it.

  19. I have a friend that is Greek Orthodox so they do Christmas in January. She always shops the after Christmas sales. Well, after December 25th Christmas sales that is.

    That’s not Christmas they are celebrating. They are most likely celebrating St. Basil’s day.

    We (Greek Orthodox) celebrate Christmas on the 25th just like other Christians.

    In January there is St. Basil day(St. Basil is the greek version of Santa Claus). Gifts are traditionally exchanged on St. Basil’s day as opposed to Christmas which is traditionally more solemn and quiet. Many of the the more religious of us actually fast prior to Christmas.

    In Greece, Carols are usually out and about both Christmas eve and New Year’s eve.

    I’m not trying to be a nitpicker, but I would hate for people to get the wrong facts about the Greek Orthodox church

  20. Forgot to add:

    St. Basil’s day is January 1 (New Year’s Day)

  21. Chi Tom, Rochelle isn’t celebrating St Basils Day, she is actually celebrating Christmas. I believe she told me that it was based on the actual date Christmas would be according to the old Julian calendar.

    Maybe it’s a family thing or an obscure sect or something like that but her church, which she claims is Eastern Greek Orthodox, and her family celebrate Christmas in January (around the 6th or the 7th) and have for as long as I’ve known her.

  22. Maybe I didn’t get it quite right and she simply meant Eastern Orthodox Church rather than Greek Orthodox, I may have morphed those two together.

  23. Maybe I didn’t get it quite right and she simply meant Eastern Orthodox Church rather than Greek Orthodox, I may have morphed those two together.

    TWC — That sounds reasonable. I am not very familiar with the Eastern Orthodox church and the differences between the G.O. and E.O. (although I was under the impression they were on the same calendar)

    Useless Facts:

    January 6 is when the G.O. church celebrates the Epihany (The baptism of Christ).

    As for Dec 25 and Xmas, my understanding of the reason behind the date is:

    That date was picked because on the same day in the Mediterranean area they used to celebrate a Persian god, Mithras, who was the god of the Sun. And, because the difference between light and darkness is such an important aspect of the December month, all our Greek traditions and customs are still based on that contrast of darkness and light.

    And if you are really bored you can see a calendar of our religious holidays here

  24. I would guess that getting induced for no clinical reason would not qualify for insurance coverage (which generally requires some minimal level of medical necessity).

    I would also guess that getting induced costs more than $500.

    If both these guesses are true, getting induced before the end of the year is not only stupid, its REALLY stupid, as in money-losing stupid.

  25. RC, good points.

    Although there is a certain amount of slush when it comes to picking a delivery date, no reputable doctor is going to induce before it’s time to do so. OTOH, it wouldn’t be unusual for the doctor to opt for slightly early delivery rather than late.

  26. Chi Tom,

    Yes, I believe that she celebrates on December 25 on the old calendar which is January something on the modern calendar.

  27. For some reason I thought it was $1000. The guy doing my taxes must be really good…

  28. irs.gov
    “With the Child Tax Credit, you may be able to reduce the federal income tax you owe by up to $1,000 for each qualifying child under the age of 17.”

  29. For some reason I thought it was $1000. The guy doing my taxes must be really good…

    Jackson, I’m a tax guy and I didn’t even notice the, ah, discrepancy.

  30. If your Church keeps to the Gregorian calendar, January 1 is the “Octave of Christmas.” It is now celebrated as “The Solemnity of Mary” by the R.C.s, and was previously “The Feast of the Circumcision.” In either case it is a Holy Day of Obligation, so that before the introduction of having Mass on the previous evening, many a “good Catholic” came to church on New Year’s Day seriously hung. Now devout partiers go to Mass, go out, get loaded, and sleep until the Rose Bowl starts.

    The Catholics celebrate Jesus’ baptism on the Sunday following the Epiphany. In either case, it’s the revelation of the Savior to the world that makes the holy day important. Many European and Latin American countries have the gift giving then, connected to the “Three Kings.” This was actually used as an answer to “How can Santa deliver all those presents in one night?” by my folks and the good sisters. Gift giving extended from Dec. 5 (St. Nicholas’ Eve) to Three Kings’ Day, and further for the Orthodox kids on the Julian calendar. Santa had both help and more than one night!

    You want another way to mess up a birthday? Set it down right around Thanksgiving. That’s a floating holiday, so sometimes your day is just before, just after, or spot on Turkey Day. Nobody gets too excited about birthday cake when they’ve got pumpkin pie and drumsticks on their mind. Arrranging a kids’ party then is murder, too, as so many of your friends have family obligations then.

    I’ve got a sister with a January birthday. If she had come in December, not only would my parents have gotten an early deduction, but she would have been one, not two years behind me in school. Our state used Dec. 31, not the start of the school year, as the cutoff for enrolling in kindegarten and first grade. I don’t know if that would have benefited her or not, but it might have given me an in for hitting on freshmen girls when I was a H.S. sophomore!

    Kevin
    (Dated a junior when I was a senior. Hey, we were both 17!)

  31. “The Feast of the Circumcision.”

    Does that gross anyone else out?

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