German Finance Minister and Vice Chancellor Lars Klingbeil of the center-left Social Democratic Party (SPD) has announced his intention to abolish and replace the joint taxation system for spouses, which has been in place since 1958. This system allows couples to combine their incomes for tax assessment, reducing their overall tax liability.

The system primarily benefits couples where one partner (often the man) earns significantly more than the other (often the woman). For instance, if one partner earns €60,000 per year and the other earns nothing, they are taxed as if each earned €30,000, saving nearly €5,800 annually. According to the Finance Ministry, this system costs the government up to €25 billion per year.

Critics have long viewed the system as a tool to keep women out of the labor market, as higher earnings by women lead to increased tax burdens. Klingbeil reportedly agrees, calling the system “out of step with the times” and stating it reflects a view of women and families that contradicts his own.

Chancellor Friedrich Merz is a vocal skeptic of the proposal, allegedly claiming he is not convinced that joint filing discourages women from working. He argues that marriage is based on shared income and mutual support, and income should be taxed jointly, not separately.

Klingbeil’s proposal involves replacing the current system with a more flexible approach: both partners would be able to distribute tax-free income among themselves to minimize tax liability. This would allow couples to retain some tax advantages, though to a lesser extent. However, it remains uncertain whether this proposal can be implemented, given the political opposition.

Source: www.dw.com