The baby wings of hospitals are getting really busy now, more than any other time of the year. And it’s all Uncle Sam’s fault, because having a baby any time before 11:59pm on December 31st can mean over a thousand dollars in child tax breaks. In fact, if you have an income low enough to qualify for the earned income credit, the difference can amount to more than $3,000.
The New York Times explores this phenomenon that is making December 28th the most popular birth date of the year. It’s like something out of Freakonomics, which explored curious ways that people respond to financial incentives.
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. When Mr. Chandra interviewed one mother in central Kentucky, she told him her doctor encouraged her to schedule a late-December birth well in advance, to be sure she got a delivery room. Anecdotes aside, Mr. Chandra thinks my estimate of 5,000 is conservative, based on his own more sophisticated statistical analysis.
The article goes on to talk about the potential health concerns of timing births in this way. I’m no doctor, but I would think common sense would suggest that that pushing things forward by more than a couple weeks just for the money might be a bad idea. Induced births and C-sections are also more expensive than natural births, which knocks up the cost of healthcare in general if not directly to the parents. I guess I could see this being something to consider if the due date was January 1st or something, but otherwise it’s something I’ve never even thought about!
By Jonathan Ping | Taxes | 12/27/07, 3:32am