Oh, Baby!
On May 6, England’s Prince Harry and his wife Meghan introduced the world to a baby with the delightfully British name of Archie Harrison Mountbatten-Windsor. The new royal is now seventh in line for the throne, which means he won’t have to spend his life faking fascination with mundane royal duties like touring factories or christening ships. The poor kid doesn’t even have a title, at least not yet. You’d think he would at least be Laird of some Scottish fishing village, or Earl of ye olde shopping malle somewhere.
The U.S. Department of Agriculture estimates it costs an average of $233,610 to raise a child. (Make that $264,090 in the urban northeast, and “just” $193,020 out in the sticks.) That total includes the costs of paying for more house, skinned knees and braces, and daycare until they get old enough that you just want to send them to school already.
Pound for pound, then, babies like Archie are the priciest people on earth. Here on our side of the pond, our tax code offers all sorts of goodies to make raising them easier. There’s a $2,000 annual child tax credit, deductions for at least part of the mortgage interest and property tax on the new McMansion, a $2,100 dependent care credit for daycare, and various strategies for out-of-pocket medical costs. But what sort of goodies will Britain’s newest royal enjoy, aside from the obvious perk of being born with a platinum spoon in his mouth?
The British tax system works a bit like ours, but with posher accents. Her Majesty’s Revenue and Customs (which sure sounds warmer and fuzzier than “Internal Revenue Service”) phased out most child tax credits two years ago. The mortgage interest deduction disappeared all the way back in 2000. Health care is already free. And as for Archie’s nanny bills, HMRC offers a “tax-free childcare” subsidy of £2 from the government for every £8 they spend, up to £2,000 per year.
Of course, the latest royal moppet won’t really need any of those. His father benefits from the Queen’s Sovereign Grant — £76.1 million in 2018 ($103 million) — which she uses partly to maintain Kensington Palace where Archie lives. Harry also shares in his own father Prince Charles’s Duchy of Cornwall income, which has been handed down to the eldest son of the monarch since 1337. And mom Meghan is no slouch herself, with a net worth estimated at $5 million from her Hollywood days.
Climbing further up the family tree, Forbes pegs Archie’s great-grandmother the Queen’s personal fortune at $500 million. She also benefits from the $25 billion Crown Estate, which includes the really pricey stuff like Buckingham Palace (worth $4.7 billion) and the Crown Jewels. Do your jewels have names? (Fun fact: The thoroughly modern Queen even posts on Instagram now!)
So, with all that Sovereign Grant money raining down on the Queen, the royals are a burden on the state, right? Think again. The Grant money works out to just about 69 pence per taxpayer. But the monarchy also generates $700 million per year in tourism revenue. Harry and Meghan’s royal wedding last summer added another $1.5 billion to the coffer. That means, despite anti-Royalist criticism, Archie’s family is actually a profit center.
You may be thinking none of this has anything to do with you. But children can make great, sticky, squirmy little tax-planning opportunities. So call us after the baby shower, and let us help you hire them for your company, write off their braces as business expenses, and even help pay for their college!