The fiscal balance of a child in the German tax and social system

The German state spends a lot of money on children, especially by contributing with its family and educational policies to the costs of child rearing. But it also benefits much more from these children from the taxes and social insurance contributions they pay in the course of their lives. The state budget, including the social insurance system, proves to be a gigantic distribution system financed primarily by contributions of working-age people, which are distributed as benefits to people in all age groups. The lifelong net effect of this system from the viewpoint of an individual is a priori unclear. In a study for the Robert Bosch Foundation, the Ifo Institute carried out extensive calculations of the fiscal effects touched off by the birth of a child, taking into consideration all possible relevant revenue and expenditure flows in the current German tax and social system. The results show that a child born today with average characteristics with regard to job patterns, earnings and numerous other features, produces considerable fiscal advantages for the state under the conditions of the current German tax and social system. Throughout its entire life-cycle and considering the effects of all its likely descendants these amount in total to approximately €76,900.