SPD leader Klingbeil proposes eliminating the marriage splitting for new marriages, sparking a dispute at traffic lights. But what does this regulation actually include and who benefits from it?
It’s about nothing less than equality and tax privileges in a partnership. Every year a debate breaks out about the so-called spouse splitting.
SPD leader Lars Klingbeil has now focused on the issue: he suggests cutting back rather than on parental allowance. The method of calculating income tax should be changed, at least for new marriages. The coalition partner FDP, on the other hand, is up in arms. What is behind the term spouse splitting and who is affected by an abolition?
What is spouse splitting?
Normally, every taxpayer in Germany has to submit their own income tax return. However, married couples and people in civil partnerships can also prepare their tax return together. Then their income is added together and halved in each case. Each partner pays the same amount of tax. Due to the progressive tax rate, where the tax rate increases as income increases, splitting can result in one falling into a lower tax bracket. According to the Ministry of Finance, this currently saves families and couples around 25 billion euros in taxes a year.
How exactly does this work?
The tax office adds the taxable annual salary of the partners, so they are treated as a unit for tax purposes. It is pretended that both get exactly half of the joint income, even if one of the two earns significantly more than the other. Income tax is calculated for this half and then doubled. This results in the income tax that the couple must pay together.
What’s the point?
Spouse splitting is particularly useful for couples where one earns a lot and the other a little. An example of the United Income Tax Assistance: A partner earns 45,000 euros a year and would have to pay 9945 euros in taxes. The other partner earns 15,000 euros a year and would have to pay 887 euros in taxes. If the two submit a joint tax return and the tax office applies the splitting tariff, they only have to pay 9,902 euros in taxes instead of 10,832 euros and save 930 euros.
Who benefits from spouse splitting?
If a couple has different income levels, joint assessment can be advantageous. The greater the difference in income, the greater the potential tax savings from spouse splitting. The tax benefit is particularly large if one of the partners has little or no income of their own. It is least useful if both partners earn the same amount.
Is marriage splitting still relevant?
Germany is often criticized by the OECD and the EU Commission for the spouse splitting – with the argument that it keeps women out of the labor market. After all, women in particular often work part-time after starting a family and put aside their careers. Due to the spouse splitting, gainful employment sometimes does not pay off for them – which then has an effect on their pension and social benefits.
Ulrich Schneider, managing director of the Paritätischer Wohlfahrtsverband, is nevertheless critical of the proposal to abolish splitting. “Abolishing the spouse splitting, which is also relevant for many families with average and low incomes, in order to finance the parental allowance for the best earners, of all things, seems poorly thought out and would be a redistribution from bottom to top,” he told the editorial network Germany.
What does politics say?
SPD boss Klingbeil got the whole debate rolling. He considers splitting to be an “antiquated tax model that favors the traditional distribution of roles between men and women”. In his view, it should no longer apply to new marriages and partnerships. The Green Party chairwoman Ricarda Lang was open to this: You are “ready to talk to us here,” she said. The FDP reacted negatively. “Anyone who keeps making new proposals that contradict the coalition agreement will always provoke new contradictions and arguments,” said FDP General Secretary Bijan Djir-Saai of the German Press Agency.
Could spouse splitting really be abolished?
The FDP argues that the abolition would amount to a tax increase for married couples and life partners – and the traffic light coalition has ruled out tax increases.
In their coalition agreement, the SPD, Greens and FDP actually planned a reform and not abolition: only the tax brackets for spouse splitting should be changed. Both partners would then be sorted into tax class 4, which distributes the monthly tax burden somewhat differently. Abolition, as Klingbeil proposes, seems difficult to imagine in a coalition with the FDP.
If it did, who would be affected?
Klingbeil has expressly made his move only for new marriages and partnerships. Anyone who has been using splitting so far could continue to do so even if the SPD leader’s proposal were to prevail.
Source: Stern
I have been working in the news industry for over 6 years, first as a reporter and now as an editor. I have covered politics extensively, and my work has appeared in major newspapers and online news outlets around the world. In addition to my writing, I also contribute regularly to 24 Hours World.
