Built on sand

There’s 350 million at stake. That sounds like a lot of money. The Christian Democratic People’s Party of Switzerland (CVP) wants to reduce the tax burden on families with children with a higher federal tax deduction. This leaves a four-person household with a maximum of an additional 910 francs per year – starting from CHF 200,000 annual wage for a single breadwinner family and from CHF 300,000 annual wage for families where both parents are gainfully employed.

Federal Councilor Ueli Maurer is right in saying that this is not a family draft legislation; it is a tax relief for the top 15 percent, which is brought to the people under the cover of family legislation. Such sweets are an excellent way of campaigning and also the Liberals (FDP) have changed from a closed no to a majority yes. Everything had started quite well. The aim was to increase incentives for well-qualified women to earn a living and to make the costs for external childcare deductible. That makes sense economically in the long term if it is also implemented at cantonal and municipal level. But the CVP has turned it into a state family relief program that has no effect whatsoever on gainful employment, but is just a tiny tax gift for high-income earners with children. Let’s be honest: the whole idea was built on sand. If the threshold for tax deduction is higher for double earners than for single earners, the incentives to earn a second income are negative. It backfires.

There is a tax system that not only creates incentives for all people who are able to work, but also solves the comical marriage penalty: progressive individual taxation regardless of marital status. This much simpler and fairer tax system demonstrably leads to an increase in women’s gainful employment because a second household income is also financially worthwhile. After all, there is a need on the labor market with the increasing shortage of skilled workers. But the CVP vehemently opposes it. I have no idea what the Christian aspect is. Before God all people are equal, aren’t they? Modern family policy should promote equal opportunities. It’s election day soon. Go and vote yourself.

Column by Esther-Mirjam de Boer, CEO of GetDiversity in the Handelszeitung of 17 October 2019.

Source on the effect of progressive individual taxation: https://www.mm-foundation.org/de/content/ecoplan-studie-auswirkungen-einer-individualbesteuerung