Union Blocks Bid to Limit Ehegattensplitting Despite Broad Economist Proposal
Twenty-three economists urge capping the Ehegattensplitting to curb tax advantages and raise female employment in Germany, but the CDU opposes the plan.
The German government faces a sharp political split over a high-profile proposal to cap the Ehegattensplitting tax advantage after an alliance of 23 economists and former constitutional judges urged Chancellor Friedrich Merz to adopt changes. The economists recommended limiting the amount a higher-earning spouse can transfer to a partner to 13,805 euros, a move aimed at reducing incentives for single-earner household structures and encouraging higher female labor participation. The proposal has won unusual cross-ideological support from prominent figures in the economics community but has met firm resistance from the Union parliamentary group. With the SPD-led Finance Ministry receptive in principle and Union politicians calling the idea a non-starter, the path to reform appears politically fraught.
Economists present cap and legal framing
The open letter delivered to Chancellor Merz packaged the suggested reform as a technical but consequential adjustment to Germany’s joint taxation of married couples. Under the proposed limit, the higher earner could only transfer a fixed amount — 13,805 euros — to the lower earner for tax calculation purposes, rather than the current practice of summing incomes and splitting them evenly. Proponents argue the change aligns tax incentives with labor-market goals and would reduce the financial penalty for second earners, most of whom are women.
The signatories included economists and former members of the constitutional judiciary, who framed the measure as compatible with family-protection principles while addressing distributional distortions. They contend the reform is fiscally meaningful yet can be designed to shield low‑income families from hardship by redirecting any net revenues to targeted family benefits.
Union reaffirms commitment to marriage protection
The Union parliamentary group swiftly rejected moves to curtail the Ehegattensplitting, with the Bundestag’s finance policy spokesperson, Fritz Güntzler, stressing the measure’s constitutional and social significance. Güntzler portrayed the splitting system as an expression of the constitutional protection afforded to marriage and family life, arguing that it should remain intact.
He also questioned whether the proposed tax change would deliver the behavioral shifts its proponents expect, saying that cutting tax advantages alone would not resolve the structural obstacles that keep many women in part-time employment. For Güntzler, improvements in childcare availability and more reliable early education hours are the principal levers for raising female labor supply.
How the cap would change tax incentives
Technically, the reform addresses the progressive structure of the income tax schedule, in which marginal rates rise with income. By restricting the transferable income that benefits from lower marginal rates, the proposal would reduce the after‑tax gains of households with a large income disparity between partners. That change would make single high-earner/low-earner household models relatively less attractive tax-wise than under the current full-splitting regime.
Analysts say the effect on labor supply depends on behavioral responses: some second earners could increase hours if the tax penalty on additional earnings falls, while others may remain constrained by external factors such as care obligations or local labor demand. The measure’s net fiscal impact will hinge on the threshold set and any compensatory reallocations the government adopts.
Broad economist support and proposed redistributions
What surprised many observers was the breadth of support among economists with differing political orientations, including leaders of influential institutes who rarely agree on tax policy. The coalition of signatories argued the reform need not be revenue‑neutral in the strict sense, and proposed channeling additional federal receipts into family transfers.
Under the economists’ calculations, limiting the splitting advantage could free resources to raise the child benefit from 259 euros to 316 euros per month and to increase the child tax allowance from 9,756 euros to 11,902 euros. Proponents say those reallocations would strengthen material support for children and families while improving the distributional profile of family policy.
Finance Ministry responses and internal divisions
The SPD finance minister, Lars Klingbeil, has previously described the Ehegattensplitting as a relic of an older tax era and signaled interest in exploring alternatives for new marriages, though he has been cautious about publicly embracing the economists’ full proposal. Inside the ministry, Klingbeil’s economic adviser, Jens Südekum, expressed clear support for the plan and described it as a feasible route to targeted family support and higher female employment.
Despite sympathetic voices within the Finance Ministry, officials have so far avoided making a formal government commitment to adopt the specific cap. That reticence reflects the complex balance within the coalition and the need to weigh legal, fiscal and political considerations before advancing legislative change.
Parliamentary politics and the immediate outlook
The proposal enters an already congested agenda of tax, pension and labor-law debates within the governing coalition, increasing the likelihood that any major overhaul will be delayed or pared back. Coalition leaders have publicly expressed a preference for resolving a subset of contentious issues before the parliamentary summer recess, but sharp differences remain over the scope and sequencing of reforms.
Union lawmakers have signaled they will treat the Ehegattensplitting as politically sacrosanct, limiting the government’s room to maneuver unless negotiators can construct compromises that preserve the core benefits for many married couples while carving out relief for single-parent and low-income families.
Prospects for rapid legislative change are therefore slim, but the debate has elevated questions about how tax rules interact with childcare provision and labor-market participation in Germany. Political negotiations over the coming weeks will determine whether the economists’ plan remains a policy paper or evolves into a legislative proposal.
If the government pursues any modification, it will face the twin tests of designing a legally robust mechanism that avoids undue hardship for vulnerable households and building sufficient political consensus across the coalition and opposition to carry it through the Bundestag.
