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Should the childless pay more tax?

A group of young German MPs have proposed that people who do not have children should pay extra tax to help pay for social services in the future. In the light of Germany’s low birth rate, should those not producing offspring pay more? Have your say.

Should the childless pay more tax?
Are you pulling your weight? Photo: DPA

In a detailed paper submitted to Chancellor Angela Merkel, the conservative group surrounding Marco Wanderwitz, suggested that from next year, Germans over the age of 25 who do not have children, should pay a share of their income as a special tax.

Those with one child should pay half the rate, while the tax would be dropped altogether for people with two children.

“In particular regarding health and nursing insurance, people without any or just with one child currently profit considerably from the fact that others in their generation have had two or more children – because in old age they will get the same communal service with clearly reduced contribution,” the paper said.

Although the level of additional income tax was not mentioned in the paper, Die Welt daily said the thinking was of one percent for those with no children at all.

Wanderwitz said he wanted to stimulate a debate after young MPs expressed frustration that the extra payments levied since 2004 from childless people to pay for old age care were not creating enough of a financial reserve – and that other services funded by capital stockpiles should also include such provision.

Family Minister Kristina Schröder said she found it a more sensible proposition to support families with children rather than to penalise people without. And Merkel, who herself has no children, rejected the idea. She said on Tuesday she thought the idea of splitting people according to whether they had offspring or not, was not helpful.

Indeed the number of exceptions which would have to be written into any general childlessness tax proposal might seem mind-boggling – what about those who cannot medically have children? Or those in homosexual relationships – or people who are not in relationships at all? How about people raising step-children, or those without children who earn more as a result – and thus also pay more income tax anyhow? Would parents whose children die suddenly find their income tax rising?

Yet German social provision relies on income taxes which are simply not going to be available when the working population declines, as it is set to do, leaving a large bulge of pensioners needing medical and nursing care – to be paid for by a much smaller working generation. Would a tax on those who have not paid to raise those workers be a fair measure?

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TAXES

Beskæftigelsesfradraget: What is Denmark’s employment allowance?

Denmark's government may soon announce changes to its tax reform plans, which will give all wage earners a bigger employment allowance. What is this and how will it affect foreigners' earnings?

Beskæftigelsesfradraget: What is Denmark's employment allowance?

What is the employment allowance? 

The Beskæftigelsesfradraget (from beskæftigelse, meaning employment, and fradrag, meaning rebate) was brought in by the centre-right Liberal Party back in 2004, the idea being that it would incentivise people to get off welfare and into a job.

Everyone whose employer pays Denmark’s 8 percent AM-bidrag, or arbejdsmarkedsbidrag, automatically receives beskæftigelsesfradraget. Unlike with some of Denmark’s tax rebates, there is no need to apply. The Danish Tax Agency simply exempts the first portion of your earnings from income taxes. 

In 2022, beskæftigelsesfradraget was set at 10.65 percent of income with a maximum rebate of 44,800 kroner. 

How did the government agree to change the employment allowance in its coalition deal? 

In Responsibility for Denmark, the coalition agreement between the Social Democrats, the Liberals and the Moderate Party, the new government said it would set aside 5 billion kroner for tax reforms.

Of this, 4 billion kroner was earmarked for increasing the employment allowance, with a further 0.3 billion going towards increasing an additional employment allowance for single parents.

According to the public broadcaster DR, the expectation was that this would increase the standard employment  allowance to 12.75 percent up to a maximum rebate of 53,600 kroner. 

How might this be further increased, according to Børsen? 

According to a report in the Børsen newspaper, the government now plans to set aside a further 1.75 billion kroner for tax reforms, of which nearly half — about 800 million kroner — will go towards a further increase to the employment allowance. 

The Danish Chamber of Commerce earlier this month released an analysis in which it argued that by raising removing all limits on the rebate for single parents and raising the maximum rebate for everone else by 20,300 kroner, the government could increase the labour supply by 4,850 people, more than double the 1,500 envisaged in the government agreement. 

According to the Børsen, the government estimates that its new extended allowance will increase the labour supply by 5,150 people.  

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