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The FDP doesn’t think it’s a good idea to cut parental allowance for high earners. Family Minister Paus is sticking to the basic child security and SPD boss Klingbeil is questioning the marriage splitting. Where should you save now? An overview.
the initial situation
Federal Family Minister Lisa Paus has to save. In 2024, the federal government wants to meet the requirements of the debt brake again – and according to the budget decided by the cabinet, this means cuts in almost all areas. The Family Ministry will have to make do with almost 218 million euros less in the coming year.
Because of the cuts, it is currently unclear whether Paus can implement basic child security as planned. The Greens politician has therefore suggested saving on parental allowance for higher earners – but the FDP rejects this. SPD chairman Lars Klingbeil has now introduced the idea of abolishing marriage splitting.
What is the Basic child security?
In the discussion that has been going on for months about the costs of the planned basic child security system, a wide variety of figures have been circulating. Paus had originally estimated twelve billion euros a year for this. In the financial planning for the year 2025, in which basic child security is to be introduced, there are now two billion as “placeholders”. At the end of August it should be clear at what amount the pointer will really be when a draft law for the project is finally ready.
The Greens are pushing for the basic child security not only to combine state benefits for children and pay them more unbureaucratically, but also to increase them. “And that’s why I’m confident that it will end up being more than two billion,” Paus said on Thursday. But you don’t expect it to be twelve billion either. Her new house number is two to seven billion, she told the current “Spiegel”.
What is parental allowance?
With the parental allowance, the state supports parents who do not work or only work a little after the birth of the child and thus earn little or no money. It must be requested. Parents with higher incomes receive 65 percent of the net earnings they had before the birth, parents with lower incomes up to 100 percent. There is at least 300 euros per month, the parental allowance is capped at 1800 euros. From about 2700 euros net monthly income, it does not increase any further.
The parental allowance is paid for a maximum of 14 months if both parents participate in childcare. The payment period can also be extended – the so-called parental allowance plus. The monthly payments are then lower.
The parental allowance was introduced in 2007. It replaced the previous child-raising allowance, which was a maximum of 450 euros. The new service should encourage more couples to have children, also because of the low birth rates in Germany. In addition, it should improve the compatibility of family and work, since parental allowance can also be drawn as a supplement if mothers or fathers work part-time after the birth. The aim was also to encourage more fathers to take a career break for their children.
So far, all couples whose joint taxable income is less than 300,000 euros have received parental allowance. Family Minister Paus has now suggested lowering the limit to 150,000 euros.
Would the new border be bad for them Equal rights?
The FDP parliamentary group leader Christian Dürr warns of a deterioration in equality between men and women in the family. Paus himself had also admitted that the step was “not a highlight” in this regard.
The Berlin economics professor Katharina Wrohlich, meanwhile, considers it unlikely that a cancellation of parental allowance for couples with more than 150,000 euros in taxable annual income will affect the behavior of those affected. In relation to a taxable annual income of 150,000 to 300,000 euros, parental allowance of a maximum of 1800 euros per month only accounts for a small part of the income of these couples, said the head of the Gender Economics research group at the German Institute for Economic Research (DIW) of the epd news agency.
However, the equality policy goals of the parental allowance would be “partially counteracted by the savings,” explained Wrohlich. An important aim of introducing parental allowance in 2007 was to enable both parents to be at least partially economically independent of their partner.
The sociologist Kim Bräuer from the Technical University of Braunschweig, who researches fathers, sees no problem for equality in this. She told the newspapers of the Funke media group that there are often no financial reasons why fathers take much shorter parental leave on average. Many high earners fear for their professional future. “They lack the confidence that their employers really want parental leave,” said Bräuer. If savings have to be made, she believes it is right “rather to reduce parental allowance for financially secure families and to focus on basic child security as a sign against child poverty”.
SPD leader Lars Klingbeil has now called for parental benefits to be modernized in order to promote equality between fathers and mothers. “At the moment most men take two months parental leave, if at all, because that is the minimum limit from which it is financially worthwhile,” explained Klingbeil in an interview with the editorial network Germany. “Shouldn’t it be better for both parents to be able to take six months each and split the rest between them? As the SPD, we proposed such a model. I think we could use the power of this public debate that has now arisen.”
What role does that play now? Spouse splitting?
Instead of the planned reduction in parental allowance, Klingbeil has proposed a quick abolition of the tax benefits through spouse splitting for all new marriages. This could also “put an end to the antiquated tax model that favors the classic distribution of roles between men and women,” said Klingbeil of the editorial network Germany.
“I’m in favor of higher income shouldering more and more responsibility. But questions about distribution are clarified through tax policy, not through parental allowance,” said Klingbeil. The parental allowance is not a social benefit, but should motivate men to take on more responsibility in the family.
How works Spouse splitting?
Spouse splitting describes the procedure according to which married couples and life partnerships are taxed who do not choose individual assessment. The joint income 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. According to figures from the Federal Agency for Civic Education for 2020, this costs the state 20 billion euros a year.
what will happen on Spouse splitting criticized?
In the past, the OECD and the EU Commission have often criticized Germany for splitting spouses – with the argument that it keeps women out of the labor market. According to economics professor Wrohlich, it demonstrably inhibits the labor market participation of married women and promotes “an unequal division of gainful employment and care work in families”. A reform of the spouse splitting makes sense from an equality and labor market perspective, said Wrohlich.
will Spouse splitting abolished?
The traffic light coalition had set out to promote economic equality in marriages. Specifically, the coalition agreement states: “We want to further develop family taxation in such a way that partnership responsibility and economic independence are strengthened with a view to all types of families.”
However, a spokesman for the FDP-led Ministry of Finance said that the coalition agreement could not be used to derive the abolition of spouse splitting. The spokesman said that another project from the coalition agreement on family taxation is currently being worked on. The traffic light coalition had agreed to abolish tax brackets 3 and 5. These should be transferred to class 4.
There could be a regulation for the transfer to class 4 with which married couples would continue to enjoy an advantage. Further details are not yet known. The fact that there are no tax increases is also a guiding principle, the spokesman said.
(Source: dpa, epd, KNA)