Family First or Country First? Why National Conservatives’ Family Tax Cuts Miss the Mark

You’ve got to give Republicans credit for consistency. When they find something they like, they stick with it. For Reagan-era supply-siders, the answer to almost every problem was the same: tax cuts for high earners. Today’s national conservatives (a.k.a., NatCons) want to apply that same magic to strengthen families.

At the very least, supply-siders sought to raise all boats through economic growth. NatCons, like their progressive counterparts, favor government redistribution, only this time through family-focused tax cuts.

Since FDR, Democrats have pitched themselves as the party of the working class by promising redistribution: higher taxes on companies and the wealthy, increased spending for lower-income Americans, and worker unionization. Now, in their quest to rebrand the GOP as the new working-class party and to promote “healthy families,” NatCons are copying that playbook, but with a twist: The focus is on tax cuts for the nuclear family.

The NatCon-aligned think tank American Compass has made family tax breaks a central part of its policy agenda. It has even floated the truly bizarre idea of allowing families to deduct all their expenses from federal taxes—cars, gas, groceries, housing—you name it. I can see it now: writing off my ESPN subscription and beer tabs as family necessities. In that world, only suckers pay income taxes.

Of course, elected officials need political cover for this kind of policy recklessness. So American Compass fields polling questions like “Should the federal government give more money to families?” Unsurprisingly, most people say yes. Who wouldn’t? Free money—sign me up. Ya-hoo!

Thanks to this organized push, family tax cuts are rapidly becoming part of Republican orthodoxy. The “One, Big, Beautiful Bill” now being considered in Congress reflects this, as it includes provisions for “Trump Accounts” for newborns, a temporary increase in the child tax credit, expanded education savings accounts, and enhancements to the paid family and medical leave tax credit.

Back in the “dreaded” neoliberal days, Republicans who wanted to help families focused on boosting growth, betting that a rising tide would lift all boats—including families. But now, like progressives, NatCons reject that logic as heretical neoliberalism. As Steve Bannon put it, growth only helps oligarchs.

American Compass’s Oren Cass has taken the lead in discrediting the rising-tide argument, writing, “Productivity, profit, and GDP have risen in lockstep since the 1960s, while wages stagnated.” Likewise, Patrick Brown argues that we must abandon the notion that economic growth aligns with the “goal of stable and thriving families.”

With the neoliberal front now saturated by these salvos, the path is open for a pincer movement: government spending or tax cuts. And since Republicans won’t do government spending, tax cuts have become their weapon of choice.

There’s just one problem: The analysis behind these family tax cuts is dead wrong.

As I wrote in Defending Digital: 40 Myths About Big Tech, AI, Privacy, and America’s Innovation Economy, the Congressional Budget Office estimated that inflation-adjusted wages grew by 51 percent, which is a tad higher than the 1 percent Cass claims. And American Enterprise Institute economist Michael Strain calculated that wages increased 63 percent and productivity 76 percent—not 1 and 140 percent, respectively, as Cass claims.

But that hasn’t stopped media elites, leftist thinkers, and NatCon policy shops from pushing the “leaky boat” theory. Now, many elected officials take it as gospel.

With growth off the table as a means to help Americans, redistribution is all that remains. The left wants to spend money on families; the NatCons want to cut their taxes, believing this reinforces their conservative credentials.

Perhaps in some alternative galaxy far, far away—where the federal government isn’t running a $1.8 trillion annual deficit and carrying $36 trillion in debt—this might be feasible. But NatCons are borrowing from the progressives’ science fiction Modern Monetary Theory, where debt doesn’t matter. Are we living in a fantasy world or just a banana republic?

What’s truly perverse about these family tax cuts is that the next generation will be stuck with the bill, or the government will default. That’s not fiscal responsibility; it’s robbing son Peter to pay dad Paul. Thanks a lot, Dad!

Say what you will about Reagan-era tax cuts, at least they had some positive effects on growth. The NatCon family tax cuts won’t even manage that.

Worse, family tax cuts suck up the fiscal oxygen needed to enhance pro-growth, pro-competitiveness reforms, such as the R&D tax credit, capital investment tax incentives, and assistance for manufacturers.

To be fair, NatCons are right to want to help parents. But rather than draining scare revenues with tax giveaways, Congress should consider a smarter and more fiscally responsible package: raise the federal minimum wage, mandate paid parental leave for businesses of all sizes, ensure that childcare subsidies are “mode” neutral (regardless of whether parents provide care in-home or use out-of-home care), and, of course, implement universal school vouchers.

Even NatCons seem to understand the value of more money for families—otherwise, they wouldn’t support tax expenditures for them. But the best way to put a chicken in every family pot is by supporting policies that raise median per-capita income. That means advancing national innovation, productivity, and yes, growth. And that requires putting business growth tax incentives at the center of tax policy.

At the end of the day, redistribution is a one-time transfer that never grows; only the debt does. Productivity growth, by contrast, is exponential. That is why it, not subsidies, is the American family’s best friend.