Maggie Gallagher
President Bush's bold plan to eliminate dividend taxes has monopolized public attention, and why not? That roar behind you is the investor class cheering -- the half or more of all Americans whose long-term economic futures are directly linked to stock market performance. The other half's economic futures are indirectly linked to the ability and willingness of the investor class (here and around the world) to provide the capital necessary to sustain economic growth.

Once again, the president proved that this Bush has the vision thing in spades. Agree or disagree, it is remarkably evident that President Bush believes in using the power of the bully pulpit to advance real reforms and dramatic new ideas. In particular, he rejects the Democratic assertion that tax cuts are government subsidies by another name. The No. 1 goal of tax policy should be to create the right incentives for productive activity. Before wealth can be redistributed or spent, it has to be made.

Just as remarkably, this president does not define productivity in narrow economic terms. Public response has focused on the dividend tax cuts, but the president's plan also contains a powerful move toward a fairer, pro-family tax code. President Bush wants to increase the child tax credit to $1,000 per child (from the current $600) and accelerate changes designed to reduce marriage penalties on middle-class families. Together, these changes will cost close to $90 billion over 10 years.

Do pro-family tax cuts matter, and if so how? For those of us who are concerned about the well-being of the family as an institution, the news is good: Research clearly demonstrates that tax measures such as the child tax credit have a real, measurable effect on the birth rate of married couples. This is a remarkable fact, worth pausing over. According to government estimates, each middle-class child costs a married couple tens of thousands of dollars in direct extra expenditures. Babies cost a bundle, and even generous pro-family tax reform can cushion the hit only slightly. But even quite modest shifts in the tax codes affect millions of married couples' fertility choices (most single mothers don't have much income after the birth of their child, and so are less affected). Millions of Americans are having fewer children than they would like because the government consumes too great a share of family income.

Maggie Gallagher

Maggie Gallagher is a nationally syndicated columnist, a leading voice in the new marriage movement and co-author of The Case for Marriage: Why Married People Are Happier, Healthier, and Better Off Financially.