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SPD's Proposed Tax Reform Could Boost Women's Employment, but May Cost Households

The SPD's proposed tax reform could boost women's employment by 2.4 percentage points, but millions of Germans may pay more due to changes in the 60-year-old marital split tax principle.

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In this picture we can see three women sitting on chairs, in the middle we can see one man and one...
In this picture we can see three women sitting on chairs, in the middle we can see one man and one woman standing in front of a speech desk, in the background we can see two flags there is a banner behind the flag, on the left side of the picture one woman is looking at a digital camera and two women are standing here, on the right top corner of the image we can see curtains.

SPD's Proposed Tax Reform Could Boost Women's Employment, but May Cost Households

Germany's long-standing marital split tax principle, in place since 1958, may face significant changes. The SPD aims to reform the system to boost women's employment and reduce advantages for traditional breadwinner marriages, potentially leading to higher taxes for some households.

The marital split tax principle allows couples to add their incomes, halve the sum, and pay taxes on it, then double it. This benefits couples with unequal incomes, with some saving up to €20,000 annually. However, the SPD's proposed reform could make it more expensive for many households.

The reform could lead to a switch to an individual taxation system, which might increase women's labor market participation by 2.4 percentage points and decrease men's by 0.3 percentage points. The outcome of the reform remains uncertain, but millions of Germans may soon pay more taxes due to changes in this 60-year-old tax practice. Previous attempts to limit the tax advantage of the marital split have been unsuccessful.

The marital split tax principle is back on the political agenda, with the SPD pushing for reform to encourage women's employment and reduce advantages for traditional breadwinner marriages. The Union defends the current system, arguing it provides proven family support. The reform's impact on taxpayers' wallets remains to be seen, but significant changes are on the horizon.

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