In 1955, the Federal Minister of Finance was still certain: If the woman goes to work, the marriage breaks, warned CSU co-founder Fritz Schäffer. “Tax privileges for the wife’s” free-market employment in a company not belonging to her husband “could” support the forces that tend to be emerging that lead to a progressive dissolution of marriage and family, “he wrote at the time in a memorandum. Today, many see things differently – only German tax law is still as it was in the 1950s. Time for an update, says Ifo President Clemens Fuest and shortly before the general election proposes reform the controversial spouse splitting, which has been in force since 1958.
“From an economic point of view, spouse splitting creates strong incentives for second earners, usually women, not to be gainfully employed or, if need be, to take a part-time job – and instead concentrate on household chores and child-rearing,” says the head of the Munich Economic Research Institute. “A shift in the system to models such as real splitting could provide impetus for a higher participation rate for second earners.” Burdens for marriages could be limited by temporary solutions.
“Women’s equality has a lot to do with employment and economic independence.”
The SPD and the Greens want to abolish the splitting of spouses, the Union is sticking to it. The image of the family today is more diverse than the traditional division of labor between men and women, with the man being the sole breadwinner, explains economist Fuest. “Equality for women, a fundamental social concern, has a lot to do with employment and economic independence.”
In order to increase female employment, however, tax policy could be just one of several pillars. “A package of measures is required to further expand childcare and greatly improve the compatibility of work and family,” said the economist. In principle, the so-called real splitting taxes the spouses independently of each other. However, the first earner can transfer a certain amount to the second earner for tax purposes. That makes sense because the spouses are mutually obliged to support each other, said Fuest. The work incentives for the second earner are therefore not as severely restricted with real splitting as with spouse splitting.