Would You Do This To Pay Zero Income Taxes For Life?

Hungary has a problem. Like many Eastern European and former Soviet countries, its population is shrinking thanks to a plunging birthrate and outmigration as young workers seek better opportunities and fatter salaries elsewhere in the European Union (EU). In 2017, the most recent year of data, Hungary had a low fertility rate of only around 1.4 live births per woman, significantly lower than what is considered the replacement rate. If nothing changes, the country’s population is projected to shrink 15 percent by 2050, from almost 10 million strong today to 8.28 million, according to the United Nations (UN).

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Hungary has one of the lowest fertility rates in the world

This could have a number of negative economic and financial consequences. For one, the country could face serious demographic risk as its workforce is squeezed and the share of elderly, non-working citizens surges.

To be fair, Hungary isn’t alone. And it’s not even in the worst shape. According to UN data, the world’s top 10 countries with the fastest shrinking populations are disproportionately found in Eastern Europe. Bulgaria, the poorest EU member state, also has the ignoble distinction of ranking first in shrinkage velocity. By 2050, its population could contract as much as 23 percent—nearly a full quarter—followed closely by Latvia (22 percent) and Moldova (19 percent).

The reason why I’m focusing on Hungary is that I think policymakers there may have come up with an ingenious way to encourage young people to stay in the country, produce more children and grow the country’s labor workforce.

Interested in Paying No Income Taxes For Life? Start Making Babies

The plan I’m referring to, dubbed the “Family Protection Action Plan,” was unveiled last week by Hungarian Prime Minister Viktor Orbán. Among its incentives is a waiver on personal income taxes for life for married women who give birth to and raise four or more children.

This could be huge.

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