Get out of the second-earner trap
The splitting of spouses urgently needs reform
Due to the splitting of spouses and the associated tax burden, women often opt for a mini job.
© fizkes / Shutterstock
Women and especially mothers are still systematically disadvantaged in the labor market. The Bertelsmann Stiftung is now proposing a reduction in the tax burden for second earners. Instead of a spouse splitting, spouses could in future be assessed separately with the so-called real splitting.
The splitting of spouses currently often means that women as second earners are more likely to take a 450-euro job than to pursue a job that is subject to tax and social security contributions. Because: Through the joint taxation with the partner, you pay the same tax rate on a much lower salary. In the end, there isn’t much left.
Spouse splitting leads to considerable tax disadvantages for second earners
Spouse splitting has been a procedure in Germany since 1958 for calculating income tax for spouses and partners who are assessed together. And this is how it works: The total taxable income of both spouses: the inside is determined and halved (split). Income tax is calculated for halved income and doubled at the end.
The taxable income is divided equally between the two partners. If a sole earner: in is assumed, this usually results in tax advantages. If the partner (s) starts working (again), he or she has to pay the same tax rate, regardless of how high the salary is.
Three quarters of the wives have a lower salary than their partners
Currently, this often means that the second earner (s) opts for a tax-free and duty-free 450-euro job rather than a half-day position with full taxes.
Of 7.6 million wives between the ages of 25 and 60, three quarters have a lower income than their partner and are therefore second earners. According to the Bertelsmann Foundation, a combined reform of spouse splitting and mini-job could bring 124,000 people into “good” employment – 108,000 of them women, according to the results of the Ifo Institute, which was commissioned by the Bertelsmann Foundation.
Bertelsmann Stiftung: Wrong incentives are currently being set for second earners
With the proposed real splitting, the spouses would be assessed separately. The innovation of the mini-job provides that this will be converted into employment that is subject to social security and tax. The tax burden is only slightly increased. The mini job would thus contribute to better security for women. In the corona pandemic in particular, it became clear how crisis-prone 450-euro jobs are, according to Bertelsmann’s announcement.
It is important in the reform that the innovations of real splitting and mini-jobs happen at the same time. An isolated reform would result in fewer women benefiting from it. For the state, the innovations would be “revenue-neutral” – so there are no additional costs.
So currently wrong incentives are being set for second earners, according to the message from the Bertelsmann Foundation. Currently, around 14 percent more income tax would have to be paid than the actual tax rate provides.
Sources used: press release and study results from the Bertelsmann Stiftung, diw.de