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Earlier this year, Donald Trump announced that he wanted Americans to have more babies, moving forward with ways to help them. These include increased access to Invitro fertilization and increased spending in areas with higher marriage and fertility rates.
But he presented a bold new idea on the Atlantic Ocean by Hungarian Prime Minister Victor Orban. He wants to introduce a lifetime income tax exemption for all women with two or more babies.
Orban said, “2025 is a year of breakthroughs! We are launching the largest tax reduction program in Europe. We are introducing lifetime income tax exemptions for mothers of two and three children. There’s nothing like this in the world!”
“The cost of living in Hungary is high, so the government needs to subsidize families,” says Ben Habib of the UK, chairman of the UK Political Action Committee and former co-leader. “It makes it easier for your mother to stay home.”
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Orban’s proposal appears to be more than a vote. Rather, it appears to be a way to correct the country’s declining population, which fell from 10.7 million in 1980, according to Macro Trends data. The decline is primarily due to the collapse of Hungary’s fertility rate. To maintain population levels, experts say the birth rate must be at least two births per woman. However, according to World Bank data, it has not happened since 1979. In 2023, the birth rate was 1.5 children per woman.
The decline in population is a natural development as the country becomes richer, says it will win the global market head strategy thinly with financial company Brown brothers Harriman. “As the economy grows and matures, the birth rate drops,” he says.
Hungarian President Victor Orban will speak at a press conference at the European Political Community Summit held at Puskas Arena in Budapest, Hungary on November 7, 2024. (Janos Kummer/Getty Images/Getty Images)
And that’s where Orban’s idea begins. Because giving money helps to increase your fertility rate. “If there’s no biological cause for a decline in fertility, you can reverse that, but there’s an incentive,” says Robert Wright, professor of economics at Michigan Central University.
Hungary is already expanding subsidies for families with children. For example, a family of two parents with one child will earn 12,200 Hungarian forints ($32) per month for that child, while a couple with three or more children will receive 16,000 ($41.60) of children per month. Single parents and those with children with disabilities or long-term illnesses earn more money. There are other benefits, such as interest-free loans for young women.
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Senior customers queue at the food counter at the Great Market Hall in Budapest, Hungary on Wednesday, December 21, 2022. (Akos Stiller / Bloomberg via Getty Images / Getty Images)
It may seem strange that there are benefits to slide scales, but there are some logic. The costs could grow even faster as families grow, says Pete Earle, director of the Economic and Economic Freedom Bureau at the American Institute of Economic Research. “When a couple has three kids,[they]need a house, not just an apartment,” he says. You will also see that bigger cars need to enter and exit school.
Orban’s new proposal to eliminate income taxes for mothers of two or more children could be even more generous than current grants. “What he’s proposing is even bigger, especially for high-income people,” Wright said.
However, population decline is not Hungary’s only challenge. The country has recently suffered from economic issues that subsidize people to make bigger families even more difficult. These include slow growth, high inflation and lack of foreign investment.
According to Trading Economics data, GDP signed 0.9% in 2023, growing modestly 0.5% last year. The government also registered a 6.7% deficit in 2023 and an estimated nearly 5% since, which could be similar this year. Meanwhile, the country’s inflation is rising. It was 5.5% in January, up from 3% in September.
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As he sits with his mother, the newborn boy yawns. (Photo by Boston Grove via Jessica Rinaldi / Getty Images / Getty Images)
“Hungary has a very large budget deficit so I don’t know how they are doing to buy Orban’s new proposal,” Earl says.
Nevertheless, Orban’s proposal, unlike Trump’s proposal, will help ensure closer ties between the US and Hungary. “Olban is one of the winners of the US election,” says Mark Chandler, chief market strategist at Bannockburn Global Forex.
