The biggest bias in fiscal policy isn’t against capital formation; it’s the perverse anti-natal incentive built into Social Security and Medicare. Those programs require every generation of adults to perform two tasks: (1) work and pay taxes so the previous generation gets to retire and (2) raise children so there are future taxpayers to pay for benefits. But your retirement benefits have almost everything to do with your work career and almost nothing to do with how many children you raise.

Don’t think this matters? Imagine living before these government programs existed, when your ability to retire at all depended on raising children, amassing sufficient personal savings, or relying on charity. Or imagine a Social Security program with benefits determined by your own kids’ earnings. No kids, no Social Security: If you want to retire, you better had raised an investment account. In either scenario, many adults would decide to raise more children and invest more in their future productivity.

The problem is that directly tying retirement benefits to your own kids’ earnings would introduce a great deal of idiosyncratic risk to retirement planning. Instead, the child tax credit, now $2,000, should be increased to $5,000 and taxpayers should be able to use it to offset both income taxes and payroll taxes.

In addition, the federal government should provide a fully refundable tax credit of $5,000 per child for children who are enrolled in private school or home schooled.