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In the future, married couples will have to fill out two separate tax returns. But there are other suggestions from Federal Bern.
What happened? The Federal Council has presented a proposal to introduce individual taxation. He wants to abolish the so-called marriage penalty. Married and same-sex couples who live in a registered partnership and fill out a joint tax return sometimes have to pay higher taxes for the same annual income than unmarried couples with two separate tax assessments.
Who is affected by the marriage penalty? It mainly affects high earners, i.e. marriages in which each spouse earns 75,000 to 125,000 francs per year. According to federal government figures from 2019, these are around 454,000 two-earner couples and 250,000 retired couples who pay up to 1.5 billion francs in direct federal taxes.
Are there other approaches to eliminating the marriage penalty? Yes, several. The Federal Council’s proposal is also an indirect counter-proposal to a popular initiative by the FDP women that was submitted a year and a half ago. The so-called “Tax Justice Initiative” basically demands the same thing as the Federal Council itself has presented, with the difference that an initiative changes the constitution, while the Federal Council acts at the legislative level. Because the work on this has already progressed and the Federal Council prefers the legislative process, it rejects the initiative, the message says. In addition, the Center Party has launched two popular initiatives on marriage discrimination in taxes and pensions, but have not yet submitted them. The deadline expires on March 27th.
What are the two centrist popular initiatives demanding? “Fair taxes and pensions finally also for married couples”: With this slogan, the Center Party, with the support of the EPP, is collecting signatures for two referendums. The initiatives entitled “Yes to fair taxes” and “Yes to fair AHV pensions” aim to ensure that all couples – whether married or not – should pay the same amount of taxes and receive the same amount of pensions in the future. Regarding taxes, the center wants to introduce an alternative calculation method that corresponds to the taxation of unmarried couples. The married couple would then only have to pay the lower tax amount. How much tax revenue the federal government is missing out on as a result and who will pay for it remains unclear.
What’s next? After the Federal Council has presented its message on the indirect counter-proposal and the initiative of the FDP women, the business will be passed on to the responsible commissions of the National Council and the Council of States before it would then be dealt with in the councils – probably not until next year. In addition: Federal Councilor Karin Keller-Sutter said at the media conference that the cantons, which would also have to support the introduction of individual taxation, were calling for a ten-year transition phase. However, this could be negotiated with the cantons later. But that alone shows that it will probably be a while before married couples are no longer discriminated against in terms of taxation.