from
UK Public Relations
from
UK Public Relations
TAX CONCERNS AFFECT TIMING OF END-OF-YEAR BIRTHS
Dan Adkins, 606-257-1754
March 22, 1999 -- (Lexington, Ky.) -- Expectant parents of children due early in January are more likely to consider special measures to deliver the child before year's end to take advantage of tax benefits, according to a study conducted by two University of Kentucky economists.
In particular, economists Stacy Dickert-Conlin and Amitabh Chandra say the new child tax credit, which goes into effect on 1998's income taxes, will increase the chances that expectant parents would choose to induce labor or schedule planned caesarian sections in order to qualify for the tax break. The tax break provides $400 per child for 1998 and rises to $500 per child on 1999's taxes.
"We find that the probability that the child is born in the last week of December rather than the first week of January is positively correlated with tax benefits. We estimate that the (new) child tax credit … increases the probability of having the child in the last week of December … by 26.9 percent," write Dickert-Conlin, now at Syracuse University, and Chandra of the UK Gatton College of Business and Economics. The two launched the study while Dickert-Conlin was at UK.
The economists tracked birth patterns from 1979 to 1992 and conducted interviews with parents and obstetricians to show a relationship between decisions to intervene in the timing of births and the tax benefits involved in having a child.
In one instance, the economists cite "one mother whose doctor encouraged her to schedule her late-December birth far in advance to avoid the rush of mothers hoping to have their babies before the end of the tax year."
Their study, "Taxes and the Timing of Births," is published in the February issue of the Journal of Political Economy.