Currently in Switzerland when two people get married their incomes are combined and taxed jointly, meaning they lose out compared to cohabiting couples who are taxed separately and therefore each have a tax-free allowance.
Though it is considered unconstitutional for a married couple to pay more than ten percent of the amount they would have paid as an unmarried cohabiting couple, in practice many married couples do pay considerably more.
Under the government’s new plans, announced in a statement on Wednesday, that gap would be reduced slightly as it evens out the rules applying to federal tax (communal and cantonal taxes would not be affected).
The new system would see married couples’ tax calculated in two ways – jointly, as usual, and under the rules that apply to cohabiting couples. The couple then must pay the lesser amount of the two calculations.
The plans “aim to end a controversy that has lasted several decades and end the extra charge, contrary to the constitution, which burdens affected married couples,” the government said in its statement.
Changes will also be made to the taxation of unmarried couples with children. Currently, while the parents' incomes are taxed separately, they can benefit from the same child deductions as married couples with children, something which “is one of the causes of the marriage penalty,” feels the government.
Under the planned changes, unmarried couples with children will no longer be able to apply this child deduction to their tax rate, so their tax will go up.
Single parent families will, however, be compensated for this by a special tax deduction “for social policy reasons”.
As a result of all these changes, federal coffers will end up 1.15 billon francs a year out of pocket, said the government.
However it hopes the initiative will encourage more people into the workforce by removing the dissuasive effect of the current tax rules on two-income couples.
Since the secondary salary will be taxed less, it will be more favourable for both members of the couple to go out to work.
Up to 15,000 full time jobs could be filled as a result, feels the government.
The issue of taxation on married couples has been long discussed in Switzerland.
In February 2016 a referendum aiming to put an end to the so-called marriage penalty was narrowly rejected by the public, but mainly because it would have changed the definition of marriage to potentially thwart any chance of same-sex marriage being legalized in the future.
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