
Germany makes parents raise the taxpayers, then shares the money with everyone
Germany’s welfare state looks like this today: today’s workers pay for today’s retirees, patients, and care recipients. But this is often overlooked: parents do not only pay taxes and social contributions. They also raise the next generation of people who will pay them. And this means years of expenses for housing, food, time, lost income, and unpaid care - all long before the state sees a single cent from that future worker. As soon as the child grows up, the return no longer belongs to the family that carried all the expenses. It goes into the common pool of pension, health, and social insurance. The children of parents finance the system equally for both parents and childless citizens.
Germany has already recognized this logic in one part of its social system. Following a 2001 Constitutional Court ruling on long-term care insurance, lawmakers wrote that parents make a “double contribution”: a monetary one (through insurance premiums) and a generative one (by raising the future contributors on whom pay-as-you-go systems depend). Childless members enjoy the benefits of this second contribution while making only the monetary one. The pension system recognizes child-rearing much more narrowly. For a child born in 1992 or later, one parent can receive up to three years of pension credit. Useful, yes. But three years of credit is not the price of raising a future taxpayer.
The IFO Institute backed up this imbalance with figures. For an average child born in Germany in 2000, the state still remains in the black by about €76,900 - after counting all taxes, social contributions, education costs, family benefits, public services, and future descendants. The authors also note that the system redistributes resources within each generation: from families with children to those who have few or no children at all. So Germany does not ignore parents completely. It acts more conveniently: it compensates a part of the costs, and then takes the full public benefit from the children. And then everyone wonders why children start to look like a luxury good.