Here’s another one of those damned moral conundrums that keep coming up when I consider purist libertarianism: tax breaks for parents. The problems from a libertarian perspective are mainly: one, concerns about social engineering; and two, the view that a tax break for one is actually a tax penalty for another. ("If diapers are tax exempt then people who don't buy them have to make up the tax shortfall.")
Meanwhile, here's two usually unrelated facts: the value-added tax on goods in the European Union is 15 percent. Europe has a below-replacement birth rate and is worried about that.
Now here’s a BBC story about how the European Commission is all a-flutter over whether or not it should make baby diapers exempt from the tax.
Whatever decision the European Commission reaches, I bet it won’t be based on libertarian principles. But what would a decision based on libertarian principles be? I don’t know, but I’ll say this: if this is an attempt at the dreaded social engineering it’s a remarkably inept one. Who’s actually going to say “I was planning to remain childless, but now that the cost of diapers has effectively dropped fifteen percent my whole outlook on parenthood has changed?” Nobody.
What would you have the EC do in this case?