Germany’s Federal Finance Minister Lars Klingbeil (SPD) has announced plans to abolish the current form of the so-called joint taxation system (“Ehegattensplitting”) for future marriages, as part of a broader push to modernize the country’s economy and labor market. In a keynote speech delivered Wednesday at an event hosted by the Bertelsmann Foundation, Klingbeil said he aims to eliminate “a misguided incentive that primarily traps women in part-time work.” According to the minister, such a reform could create tens of thousands of full-time jobs.
Germany’s existing tax rule benefits married couples with large income disparities. The greater the difference in earnings, the higher the tax advantage when filing jointly. However, if the lower-earning partner increases their working hours, the tax benefit shrinks significantly, often leaving little net gain from the additional income. This structure, Klingbeil argued, reduces incentives for lower earners to work more hours, most of whom are women.
“We will, as a society, have to work more overall,” Klingbeil said during the event. At the same time, he stressed that those already at their limits should be relieved by unlocking “other potential” within the labor force. He described Germany’s current labor market challenges as “obvious,” citing high rates of part-time employment, incentives for early retirement, and transfer systems that fail to encourage additional work.
Klingbeil also emphasized that work must become more attractive in professional life. To that end, he announced a planned income tax reform aimed at reducing the burden for 95 percent of employees. While he did not provide specifics such as income thresholds or tax rates, he indicated that the relief should amount to “several hundred euros per year.” He added that the plan would require funding, stating: “For me, it is absolutely clear that high incomes and large assets will have to contribute.”
Klingbeil’s remarks put him at odds with CSU leader Markus Söder, who earlier this week firmly rejected any increase in the top tax rate. “Our principle must be: taxes down, not up,” Söder told Stern, adding that anything else would be “a slap in the face for the middle class who drive performance.” Söder has proposed financing tax cuts through budget savings instead.
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