Economy & Politics

More net on the pay slip

A reform of spouse splitting could improve the tax situation of people with lower incomes – such as sellers. Photo: dpa / Tobias Hase

Economists at DIW Berlin are pushing for a reform of spouse splitting. The aim is to increase the participation of women in the labor force. A group of taxpayers would be worse off.

Berlin – One year before the general election, the debate about the usefulness of spousal splitting is picking up speed again. The German Institute for Economic Research (DIW Berlin) has now presented a reform concept which the scientists believe is suitable for increasing the number of women in the labor force. In addition, additional tax revenues of ten billion euros can be expected, of which two billion were due to employment effects.

The experts are not thinking of abolishing the splitting of spouses, but of reform. Specifically, the researchers propose that the partner with the higher income can in future transfer an amount of a maximum of 9696 euros per year to his lower-earning partner. This corresponds to the amount of the basic tax allowance. The recipient then has to tax the amount as other income, but the bottom line is that they are better off because they are charged their own, low tax rate.

A system from the 1950s

Second earners in a marriage – usually women – should in future have more net of the gross than before. This could provide an incentive for part-time workers to work more. For married people who live on their partner’s income and otherwise take care of the household and children, taking up work could become more attractive.

“Our proposal is not only relatively easy to implement and transparent. It also avoids undesirable distribution effects in favor of better-earning couples with two earners, ”said DIW tax expert Stefan Bach. Only the upper fifth of all income earners would be asked to pay more than before.

Spouse splitting has existed since the 1950s. It is a tax privilege that only married couples or couples who live in a registered partnership can enjoy: If the partners choose a joint tax assessment, their two incomes are added together and then divided by two. If one partner earns a lot and the other earns significantly less or nothing at all, the joint tax burden falls. Couples who want to use this every month choose tax class III for the higher income and tax class V for the lower income.

Those who have the lower income and the less favorable tax bracket often get little paid and sometimes have the impression that the work is hardly worth it.

Proponents of this system point out that the Basic Law places marriage under the special protection of the state. This must also be reflected in tax law, is their argument. The Federal Constitutional Court, in turn, points out that a marriage also creates maintenance obligations – unlike a partnership without a marriage certificate. A complete abolition of the spouse splitting and individual taxation as in Sweden or Austria therefore appear unlikely. Critics of the system complain that it breathes the spirit of the 1950s. It promotes single-earner marriage or pushes women into the part-time trap.

CDU rejects proposal

DIW Berlin understands its concept as a compromise proposal. Other reform concepts would not have the desired effects.

In federal politics, the reactions were very different. The CDU financial expert Olav Gutting said: “The proposal means an income tax increase of the order of eight billion.” It is misleading to attribute the low labor force participation of women to the splitting of spouses alone. Most couples chose the lifestyle that suited them. For the Green MP Lisa Paus, however, the proposals do not go far enough. She called for the abolition of spouse splitting for new marriages and a fundamental reform of family support. “The splitting of spouses is a symbol of a backward-looking social policy,” said Paus. She added: “It is detrimental to equality between men and women to give tax incentives if a spouse does not go to work.” This is also unjust to unmarried couples and single parents who go completely empty-handed.


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