Family splitting

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The family splitting is a method of taxation,

  • where the income of parents and dependent children is combined and taxed together,
  • Families with children are only better off from a tax point of view above a certain income level than with child benefit and child allowances ,
  • the higher earners are disproportionately relieved due to the reduction in tax progression .

“Family” in this sense is the economic community of parent (s) and child (ren). The family splitting is based on the idea that the tax "ability" depends on how many people have to live on an income. The performance understood in this way is, with the same net income , significantly lower for parents than for childless people: after deducting the maintenance costs for the children, a lower disposable income remains. Possible variants are flat-rate splitting and real splitting . Both forms of splitting are already practiced today among adults: flat-rate splitting in the form of so-called spouse splitting , real splitting in the event of divorce. A splitting is independent of other control instruments and can be combined if necessary with them, transferable or non-transferable allowances, individual or joint assessment of family members. The distinguishing feature is the group of registered tax subjects, which is defined separately by law.

Reason for family splitting

Family splitting can serve to implement the performance principle as a concretization of tax justice , i.e. equality before the law. According to the efficiency principle, two people who are equally capable should have the same tax burden. Today's tax exemptions for children act like a capped real family splitting. Since this “cap” is equal to the subsistence level of the children , but the maintenance burden of most parents is much higher, this disadvantage is alleviated, but in no way eliminated, and the less the higher the family income is, because on the one hand it is the maintenance claims, on the other hand the tax rates increase. A higher tax-free allowance, like an excessive distribution factor in the case of flat-rate splitting, would represent real family support for families where the actual maintenance burden is below the allowance, comparable to the support portion of today 's child benefit .

In practice there is now a right to choose between child benefit and child allowance. In the case of lower incomes, the child benefit is higher than the relief effect of this exemption, depending on the splitting model even higher than the relief effect of a fictitious family splitting. These families receive real support through child benefit. With increasing income, this share of funding decreases and eventually disappears completely.

Real splitting

The problem with real splitting is that in practice there is usually no real cash flow within the family, but rather one member “buys” for another or maintains joint accounts. Instead of the actual cash flows, one can orientate oneself on the maintenance claim , as it is determined for children in the so-called Düsseldorf table by the family courts. However, the calculation becomes complicated when several family members have income (the children, for example, from capital assets). In addition, the rules for maintenance claims under private law are now tailored to cases of divorce and deficiency and are only able to depict the reality of families very imperfectly. Many parents devote significantly more to their children than they "ought to" under maintenance law.

Flat rate splitting

Flat-rate splitting is easier:

  • the income of all family members (instead of just the spouse) is added to a total income
  • the total income is arithmetically divided among all family members (instead of just the spouse). The division can be made in equal parts or consider parents and children with different factors (e.g. main earners: 1, parents without gainful employment: 1 or 0.75, children: 1 or 0.75 or 0.5, depending on age, if applicable). The more finely one tries to balance these factors, the closer one approaches a real splitting in the effect.

Justice Debate

While supporters claim the family splitting to justice manufacture , critics ask this question. They argue that the higher the family income, the stronger the relief effect. Wealthy families would therefore be “promoted” disproportionately.

Critics of splitting procedures demand that children be encouraged and not the form of living together. Family splitting related to marriage (or some other form of cohabitation) would above all promote the form of cohabitation in question; single parent families in particular would benefit comparatively less. The introduction of a basic child benefit would be more equitable, as it would support every child equally, regardless of the extent of parental employment and regardless of the type of family in which the child lives.

Proponents of family splitting see different levels mixed up in an inadmissible way: “vertical” tax justice, i.e. the question of how much higher the tax should be when income rises, is a matter of tax progression . In order to avoid that “poor” families are nominally less relieved than “rich” families by splitting, the progression formula can be changed and the tax rate increased more with increasing income. In practice, this would even be unavoidable, as the general tax rates would have to be increased if a family split was introduced to counter-finance the tax shortfalls. The relief of “wealthy” families would not be at the expense of “poorer” families, but at the expense of even more affluent childless people, and the (less) relief for “poorer” families would be at the expense of “poorer” childless people.

Effects of family splitting

If child benefit ceases to exist at the same time, family splitting would only relieve married couples with two children (splitting factor: 1.0 + 1.0 + 0.5 + 0.5 = 3.0) with an annual income of around € 100,000 (income tax rate and 2014 child benefit) , even increase the load beforehand. An income millionaire, on the other hand, would be relieved of an additional almost 9,500 euros annually.

However, if child benefit is granted in addition to family splitting, based on the French model, or if, according to the German model, child benefit would be granted as an alternative to family splitting, then family splitting brings about an improvement for each family compared to child allowances. With a taxable annual income of 35,000 euros, the total relief for two children is approx. 6,650 euros, with an income millionaire approx. 20,000 euros.

If children were rated with a factor of 0.7 (instead of 0.5), the family splitting would only benefit from a taxable income of around 65,000 euros. A factor of 1.0 reduces the income limit to around 45,000 euros.

The much greater relief in relation to income would be experienced by unmarried and single parents.

Political discussion in Germany

Since family splitting is not currently practiced in Germany, the term family for purposes of family splitting is not defined in more detail. The political discussion assumes that it includes dependent children (and their income, if applicable). Current law takes into account reductions in performance primarily through child allowances and child benefit . They benefit all parents regardless of marital status. A family splitting would therefore also have to include illegitimate children, provided that their parents are not going to deteriorate.

Family splitting also grants dependent employees the tax options of entrepreneurs: They can distribute the income among all family members and thus reduce their tax payments.

  • The left want to abolish spouse splitting and introduce individual taxation (election program 2013).
  • The Greens want to replace spouse splitting with individual taxation with a transferable basic allowance (2013 election program).
  • The SPD wants to introduce a partnership tariff for spouses for future marriages from a key date instead of spouse splitting, in which both partners are taxed individually (2013 election program).
  • The CDU and CSU want to stick to the previous system of spouse splitting (government program 2013-2017).
  • The FDP also wants to stick to the spouse splitting, but would like an extension to illegitimate partnerships and same-sex partnerships (the case since the 2013 tax year). She also calls for the child allowance to be adjusted to the tax-free subsistence level for adults (2013 election program).
  • The AfD advocates that the family income is divided among all family members for tax purposes and taxed accordingly. This tax model is intended to create a further incentive to start a family. A replacement of the spouse splitting by the family splitting is not planned (election program 2017).
  • In an appeal, 16 German associations oppose the splitting of spouses and family splitting. In the view of these associations, the plans within the government for family splitting threaten to squander money in favor of a few families.

Family splitting in France

In France, family splitting is not viewed as a promotional measure, but merely as consistent compliance with horizontal tax equity . In order to grant a family split, the obligation to grant maintenance payments is sufficient ; marriage is not required. Divorced spouses coming to an unlimited amount Real splitting used.

In France, family splitting is called "Quotient Familial" (family quotient). It applies

  • for each parent the divisor 1.0
  • for the first, second, fourth child and other children the divisor 0.5
  • the divisor 1.0 applies to the third (France wants to make the decision to have a third child easier)
  • Single parents can also claim a divisor of 0.5.

However, the influence of splitting is limited. In 2001 it was limited to € 2,017 per year for the first and second child and to € 4,034 per year for the third and each subsequent child. As in Germany, spouse splitting applies to spouses without children .

In 2004, the French government introduced a kind of “ remanence splitting”: families who no longer have any children but have raised at least one child up to the age of 16 are allowed to use an additional divisor of 0.5 for life.

Family splitting in Austria

Austrian tax law has followed the principle of individual taxation since the income tax law passed in 1972 under the social democratic federal government Kreisky II . However, maintenance obligations are taken into account through deductible amounts (single earner or single parent tax credit, child tax credit).

In the discussion about a tax reform planned for 2010, representatives of the conservative ÖVP advocate family splitting. Family splitting is rejected by the SPÖ because it is seen as an incentive, especially for women, not to participate in working life. In addition, reference is made to existing support for families through family allowances and child care allowances.

Family splitting in other EU countries

There is no family splitting in most other countries of the European Union , the only exception being Portugal

Individual evidence

  1. ↑ Comparison to other forms of promoting marriage and / or family: Familiensplitting , vbm-online.de
  2. ↑ Frankfurter Rundschau: “We need a policy that promotes all children” ( Memento from December 2, 2008 in the Internet Archive ) , May 15, 2007
  3. ^ Family tax incentives in France and Germany. (PDF; 191 kB) In: DIW Berlin weekly report No. 33/2005. August 17, 2005, accessed November 11, 2009 . P. 482 .
  4. ^ Family tax incentives in France and Germany. (PDF; 191 kB) In: DIW Berlin weekly report No. 33/2005. August 17, 2005, accessed November 11, 2009 . P. 481 .
  5. ↑ Family splitting : a “retro model”? The press of March 17, 2007
  6. ↑ Frankfurter Rundschau: We need a policy that promotes all children ( Memento from December 2, 2008 in the Internet Archive )
  7. ↑ Autoridade Tributaria e Aduaneira Tax System in Portugal ( Memento of 12 May 2013, Internet Archive ) (PDF; 689 kB)

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