Reform proposal for marriage taxation in Germany: De facto income splitting with a low transferable amount
Two traditional options for reforming Ehegattensplitting, the joint taxation of married couples with full income splitting, are de facto income splitting (Realsplitting) or individual taxation with a transferable personal allowance. However, these proposals do not significantly reduce the marginal tax burden on the secondary earner's income and therefore only minimally encourage married women to participate in the labor market. Another option for reform is an additional personal allowance for married couples, but this concept is difficult to understand and further benefits dual income couples with middle and high incomes. Moreover, alternative methods of taxing married couples in Germany must adhere to specific legal regulations. A satisfactory compromise would thus be de facto income splitting for married couples with a transferable amount equal to the personal allowance. This proposal fulfills the legal criteria, is easily understandable, generates a certain amount of additional tax revenue, avoids burdening the lower and middle income brackets, and encourages secondary earners to participate in the labor market.
Year of publication: |
2020
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Authors: | Bach, Stefan ; Fischer, Björn ; Haan, Peter ; Wrohlich, Katharina |
Published in: |
DIW Weekly Report. - Berlin : Deutsches Institut für Wirtschaftsforschung (DIW), ISSN 2568-7697. - Vol. 10.2020, 41/42, p. 423-432
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Publisher: |
Berlin : Deutsches Institut für Wirtschaftsforschung (DIW) |
Subject: | family taxation | tax reform | female labor supply | income distribution |
Saved in:
freely available
Type of publication: | Article |
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Type of publication (narrower categories): | Article |
Language: | English |
Other identifiers: | 10.18723/diw_dwr:2020-41-1 [DOI] 1736639048 [GVK] hdl:10419/226715 [Handle] |
Classification: | H24 - Personal Income and Other Nonbusiness Taxes and Subsidies ; J22 - Time Allocation and Labor Supply ; D13 - Household Production and Intrahouse Allocation ; D31 - Personal Income, Wealth and Their Distributions |
Source: |
Persistent link: https://www.econbiz.de/10012319485