Dhe SPD politician and former Federal Finance Minister Peer Steinbrück has criticized his party leader Lars Klingbeil’s initiative to abolish spouse splitting. “You don’t just let a hot-air balloon start without carefully considering the issues involved,” said Steinbrück on Wednesday on the ARD program “Maischberger”. These questions are also of a constitutional nature. “Even if the focus should only be on the burden on new marriages. This in turn affects a principle of equality and would also burden new marriages with considerable additional tax expenditure.”
In an interview, Klingbeil had proposed the abolition of spouse splitting for newly concluded marriages instead of the planned savings in parental allowance. From his point of view, it would be good to put an end to this “antiquated tax model that favors the classic division of roles between men and women”. The coalition partner FDP strictly rejected the proposal.
Many women do without overtime
With spouse splitting, the joint income of a couple is halved, the income tax due is calculated and the tax liability is then doubled. This is particularly useful for couples where one earns a lot and the other a little. The marriage splitting was only written into the Income Tax Act in 1958 at the instigation of the Federal Constitutional Court. Germany is often criticized for the regulation by the OECD and the EU Commission – with the argument that it keeps women out of the labor market.
The “economist” Achim Truger sees it similarly. He told the “Rheinische Post” that the splitting reduces “due to a high tax limit for second earners – mostly women – the incentives to take up gainful employment and to increase the number of hours”. Many women are pushed into mini or part-time jobs. “Estimates come to 200,000 full-time jobs, in some cases significantly more, by which employment is reduced by the splitting”.
Possible alternative model
According to the member of the Council of Economic Experts, a reform is overdue. However, for constitutional reasons, splitting cannot be abolished. A reform model is real splitting, in which a tax-free allowance can be transferred between spouses to reduce taxes. “Realistic reform options could add up to between 5 and 15 billion euros per year in the medium term, most of which would be borne by the top 20 percent of the income distribution,” Truger continued. This money could be used for tax relief or to support families with children, for example through basic child security, or to expand childcare.
The German Child Protection Association is also calling for a reform. “The marriage splitting in its current form is not suitable for promoting families with children,” said the President of the Child Protection Association, Sabine Andresen, the “Rheinische Post”. It relieves married couples, regardless of whether there are children in the family. Unmarried couples with children and single mothers and fathers did not benefit.
Child Protection Association wants system change
“A poverty-proof basic child security that reaches all children directly and is paid out unbureaucratically would be a sensible alternative in terms of family policy,” Andresen told the newspaper. That could be a minimum amount that is paid out similar to the current child benefit and that is increased depending on income up to a maximum amount. “This would relieve those families with children who need it most.”
Regarding the ongoing discussion about cuts in parental allowance, Andresen said that parental allowance is primarily a political equality measure. It does not aim to combat child poverty. Families in poverty did not benefit at all. “We see how loud the protest about the lowering of the income limit for parental allowance is. And we want just as loud support when it comes to tackling child poverty,” she said.
In the dispute over the financing of the basic child security planned for 2025 between Family Minister Lisa Paus (Greens) and Finance Minister Christian Lindner (FDP), there is room for parents with a taxable annual income of more than 150,000 euros to no longer pay parental allowance. The limit is currently 300,000 euros.
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