Is Germany's Tax System Trapping Married Women in Part-Time Work?

For many women working part-time in Germany, increasing their working hours simply does not pay, and the country's tax benefits of joint taxation for married couples is a key reason why. A Bertelsmann Foundation study presented Thursday found that 50 percent of married women between the ages of 45 and 66 said increasing their working hours was not financially worthwhile for them.

Among those who were not working at all, nearly 35 percent said paid employment was not worth their while financially, though most women in this group were not working due to health reasons.

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How the Marriage Tax Benefit Works

Under the joint tax assessment system for married couples, couples with significant income disparities receive tax benefits. The greater the income gap between partners, the larger the tax benefit. However, when the lower earner increases their working hours, this advantage shrinks, leaving little of the additional income remaining after tax. The system has long been criticised for removing the incentive to work for lower earners, who are frequently women in part-time employment, mini-jobs or outside the workforce entirely.

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What Scrapping the Benefit Could Mean

In a hypothetical scenario involving separate tax assessment, the study identified "great potential for more employment." This could raise the employment rate of women in the age group by almost 1.5 percentage points, equivalent to an expansion of working volume of up to 175,000 full-time positions. The study does not only propose reforming the marriage tax benefit but also calls for abolishing the special tax treatment of income from mini-jobs.

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Reform Alone Is Not Enough

The study also emphasised that the effect would be further strengthened by "shared care work and good working conditions." In the hypothetical scenario where care responsibilities were assumed to be split equally between partners and working conditions were pleasant with a high degree of flexibility, the willingness to work more hours also increased.

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The study was commissioned by the Bertelsmann Foundation and carried out by DIW Berlin, which surveyed 3,788 women between the ages of 45 and 66 in June and July of last year.

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