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Article

Abstract

Part I considers the proper tax treatment of out-of-pocket parenting expenses such as the costs incurred in providing food, clothing, shelter, and other goods and services to children for their consumption. Part I first characterizes the principal design alternatives to the present flat dependency deduction. It then examines the dominant accretion definition of income and concludes that the current flat dependency deduction is more consistent with the accretion concept and our actual governing beliefs than any of the alternatives advocated by its critics. Part II considers the tax relevance of imputed income from self-performed services. It explains (1) how the positive imputed income from household production should be taxed; and (2) the extent to which a parent's childcare obligations constitute negative imputed income. Part II concludes that the present income tax system discriminates against all parents by failing to allow a deduction for the negative income produced by parenting and discriminates against two-worker married couples by failing to allow a more generous deduction for employment-related childcare expenses.

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