Why do governments provide a tax discount for married couples who don't have children?

Question

It's perfectly clear to me why the government would provide tax discounts for having children: today's kids are future taxpayers and society wants to incentivize having more of them when birth rates are low. But why provide any benefits whatsoever to people who are merely married? Society at large doesn't benefit from people's marriage, it only benefits when the married couple ends up having children.

Or perhaps there are countries that follow exactly this model and only provide incentives for married couples who have children?

Answer 1

There probably is no general answer - the tax discount for married couples greatly differs in different tax systems and probably has a different motivation in every system. Some motivations that are often given (not that I necessarily agree with them) are:

• Marriage, in general, is good for society, because it provides stability, reduces promiscuity, etc.
• Married partners generally will (and often must) financially support each other, so married people are less likely to have to resort to welfare programs.
• Most married couples will end up having children, so this supports children, too.

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In particular, in germany, the main tax advantage of being married is the availability of income splitting - which simply means that the income of married couples will be taxed as if each partner earned exactly half of the total income. This provides a tax advantage (because income tax is progressive) which grows the more different the actual incomes of the partners are.

This is usually justified by claiming that married couples typically share their income anyway, and the state should not influence a couple's decision on how they split their work. For example, the political party FDP says:

Warum geht es beim Ehegattensplitting auch um die Freiheit des eigenen Lebensmodells?

Kritiker des Splittingtarifs argumentieren oft damit, dass herkömmliche Arbeitsaufteilungen in Familien aufgebrochen werden müssten. Es geht den Staat aber nichts an, wie Paare sich die Verantwortung für Arbeit und Familie aufteilen.

Translation (by me):

Why is income splitting also about the freedom to choose one's own path in life?

Critics of the income-splitting system often argue, that the traditional distribution of work in families must be broken up. However, it should not concern the state how families distribute the responsibility for work and family.

Source: FDP - Faire Steuern für Paare – Ehegattensplitting beibehalten

Answer 2

In part, this discount is a hold-over from when marriage implied two people living on one income: i.e., husband as sole breadwinner, with wife as a fiscal dependent. This extra dependency (in addition to any child dependents) justified the tax incentive. Of course, single-income, male-breadwinner families are far rarer these days, with only certain income classes being able to afford that arrangement, and only certain religious conservatives finding the arrangement attractive. These days the marriage exemption is touted as either:

• An effort to incentivize traditional marriage practices, or...
• An acknowledgement that married couples often have somewhat higher expenditures given the change in life circumstances (e.g., home ownership, and the implication of a desire for parenthood)

I'm not sure the marriage exemption is still meaningful (except for traditional relationships), but trying to eliminate or overly-modify it would create a political firestorm that that no one really wants to face.

Answer 3

But why provide any benefits whatsoever to people who are merely married?

Altough the discussion often centres around children, that's wide off the mark.

It's simple: With responsibility come privileges.

When married, you are responsible to pay

• your partner's livelihood before a social safety net kicks in
• a nursing home
• your spouse's funeral
• your deceased spouse's debts if you don't reject the complete heritage within 6 weeks germany

Now, if all you got out of an official state marriage would be responsibilities, who would do that? You could stay unmarried and skirt the financial obligations.

Society at large doesn't benefit from people's marriage

This premise is wrong, as society does indeed benefit from one marital partner taking care of the other.

Answer 4

Because every Western country was Christian when tax codes were set up

Christianity is strongly opposed to sex for pleasure. Catholic doctrine (which for a millennia and a half was the only Christian doctrine) is that sex exists only for procreation, and sex for any other reason is sinful. In spite of Biblical examples of polygamy, Christianity fixed on monogamy as the permitted route for procreation. This all carried over into most subsequent Christian sects. And every Western country is or was majority-Christian.

Taxation in a more modern country is not merely about raising money to fight wars. In many cases (carbon taxes, airport taxes, taxes on cigarettes and unhealthy foods, tax breaks on renewable energy) it provides a push through the "invisible hand" of the capitalist economy to promote "good" activities and reduce "bad" activities. If you see sex outside marriage as sinful, then tax breaks to encourage people to marry are simply obvious.

Most historically-Christian countries now have policies driven by secular principles, rather than the (fairly arbitrary) biases of a particular sect. Some aspects of this history often still remain though, like shop opening times on Sundays - or like tax breaks for married people. In time it seems likely that these will fade away, but the spreading secularisation of the West is an ongoing process that's taken hundreds of years to get to this point. In the meantime you can expect odd corner cases like this all over the place.

And some countries (most notably the US) are a lot further behind on secularisation than others. In those cases, some minor inequality in the tax code is a trivial inconvenience compared to institutional racism and sexism.

Answer 5

Perhaps just to win some votes.

In the United Kingdom in 2013, then-Prime Minister David Cameron announced a tax break for married couples, which allows one married partner to transfer up to 10% of their tax-free allowance (the amount of income that is not subject to income tax; then £10,500 per year) to the other partner, if the other partner is taxed at the basic rate (20%).

That's a complicated way of saying that, essentially, if one partner is working (but not earning too much) and the other has little or no income, then the couple together could save up to £210 a year on their income tax bill (now £252 a year due to increases in the tax-free allowance). That's not a lot; it affected only about a third of married couples in the country, and the benefit was £4 per week (now £5). It's rather doubtful that such a small financial difference would enter into a couple's decision to get married.

But that wasn't the point. Cameron's public messaging about the tax break was not about the amount of money, or about encouraging people to get married. According to him (quoted in The Telegraph, emphasis mine):

“This policy is about far more than pounds and pence. It’s about valuing commitment,” Mr Cameron added. “Families are the bedrock of our society. It’s families who raise our children, look after our old and keep our country going. And this tax change is about saying as a society, we recognise that.”

Similar language appeared in the party's 2010 manifesto (page 41, emphasis mine):

We will recognise marriage and civil partnerships in the tax system in the next Parliament. This will send an important signal that we value couples and the commitment that people make when they get married.

So it was about making a statement that his government valued a certain segment of society, rather than achieving an economic outcome. Or in other words, it was about communicating with voters.

Perhaps more tellingly, despite the policy being decided upon in 2010 and formally announced in 2013, the tax change was timed to come into effect in April 2015, only one month before the next general election was to take place.

Answer 6

This is a relict from times when only man was working. Tax was calculated from the family income, but a woman was not expected to make any notable part of it.

Fixing this historical nonsense is difficult because additional taxes now paid by married couples then must be paid by other groups that oppose. Switzerland failed to pass a referendum.

Answer 7

france

We don't.

We have three kinds of relationships

• concubinage (= people are/live together without any legal consequences)
• PACS (= civil contract)
• marriage (= civil contract with more possibilities financially)

The last two are very close, tax wise.

What gives you extra tax relief are children, each counts as 1/2 human (obviously the ones who decided this never had children...) and applies to the parent(s) to whom children are attached to. In other words, if you are a family of 4, you are seen as 1 + 1 + 2*0.5 = 3 items.

Answer 8

Arguably governments are pandering symbolically to a wealthier section of the electorate who still actually get married.

The tax allowance often isn't very significant, and even over decades would scarcely defray the most basic expenses of the marriage itself.

But it's also possible governments see it as somewhat financially desirable that people declare their relationships to the state, form stable and long-lasting relationships, and that couples assume joint legal and financial responsibility for each other.

This potentially avoids for example social security payments during brief spells of unemployment (if there are two earners), and avoids some health-related and old-age care costs.

Answer 9

A general philosophy of taxation in germany (and elsewhere) is that things that operate as an economic unit are taxed as a unit. For example if half of a company has mainly expenses and the other half is making profit, only profit after expenses gets taxed; after all the expenses may be necessary for the profit. Or if I am buying office equipment so I can do my job, I may tax-deduct it (with some restrictions).

Now, the tax benefits in question treat a married couple as such an economic unit. This in turn is based on the assumption that married partners have a high level of trust in each other and share everything. For example, if one partner focuses more on running the household such that the other partner can put some extra focus on their job to earn more, this is seen as happening within the unit. From this perspective, the tax benefits are not benefits but avoid couples being disproportionately affected by tax progression, etc.

If we suddenly stopped allowing married couples to be taxed as a unit, this would lead to some weird incentives, for example:

• To start simple, let’s consider the tax on gains from financial investments. Right now, these are not taxed below 1000 € (of gains) for a single person and 2000 € for a couple. Therefore, for a married couple, it doesn’t matter which partner owns their financial assets. If the couple were not treated as a unit and taxed separately, they would benefit from splitting their assets in such a manner that the prospected gains are equally distributed.

• Suppose, I get a new job while my spouse is unemployed. Without taxing couples as a unit, it would be advantageous if my new employer hired both of us half time (for half the income) instead, although I do all the work. And a sufficiently shady employer might actually do this for part of our tax gains.

• Suppose I work full time, while my spouse is unemployed and running the household, taking care of our children, etc. Without taxing couples as a unit, I could reduce the taxes we pay as follows: I hire my spouse as a housekeeper any nanny and pay her with part of my income. At first glance, this would increase the taxes we pay due to double taxation: What I pay my spouse gets taxed as my income as well as theirs. However, I can tax-deduce expenses for a housekeeper, nanny, etc. to a certain extent. Thus, I can avoid double taxation and benefit from equalising our incomes and being less affected by tax progression. Figuring out the optimal wage I pay my spouse is left as an exercise to the reader.

In all these examples, I can at least partially restore the tax benefits for couples, but I create a lot of bureaucracy, pointless work, etc. In particular, couples who have enough time at their hand to do these kinds of things benefit without creating anything of value in the process.

Finally mind that I am merely describing the rationale, not fully endorsing it. Some of its assumptions as well as the choice of a marriage (instead of a family) as an economic unit are debatable. Also, many of the above problems can arguably be resolved by changing the respective parts of the tax system – which leads to another reason why this exists: We have a complex tax system that is organically grown to compensate for all kinds of things and the benefits for couples are arguably one of them and made other compensations unnecessary. It would thus not be a good idea to abolish those benefits in isolation – you would have to overhaul the entire system.

Answer 10

The tax benefit for having a child only kicks in after you choose to have a child - the process of having a child also would take money, and the decision to have a child implies savings for the child, which costs money

Marriage helps with child rearing in a few ways - it helps in reducing the need for paternity tests, ideally providing multiple incomes to support the child (Whether through a marriage, or through a child support alimony post-divorce, either way works out to some extent), and helps with determining family names for an ancestral record of who is related to whom.

But there's a problem with only providing tax refund on having a child - there's costs incurred to have a child (Some of which mostly apply to having a planned child more than an unplanned one, but nonetheless, still exist as a cost):

1.) They need the free time to engage in the act of sexual reproduction;

2.) They're going to incur multiple costs of pregnancy tests, and the follow-up appointments that come from needing an ultrasound/additional healthcare;

3.) The amount of food they're going to eat during the 9 months pregnancy period will likely increase;

4.) They'll want additional things to have at their home when the child is born;

5.) Any miscarriages or unplanned abortions that happen would effectively make all the above for nothing, and would require trying again and incurring all the costs again (If they really want that tax benefit, or if they just want a child for non-tax benefit reasons.);

6.) If they do in fact have the child, now they have maternity and paternity leave often being used to care for the newborn baby, and there are additional costs involved.

Most married couples that plan to have children will, if they aren't able to save up to prepare for those costs, simply not have a child (Or perhaps they'll just adopt or foster a child - but that's not the usual reason for a tax benefit for children.). Tax benefits of simply being married, however, would allow married couples that plan to have children save up more as a result of the tax benefit of being married.

Answer 11

poland

It used to be the other way round in Poland - you had to pay extra taxes if you did not have children. From Wikipedia:

Introduced Bykowe, which was a tax on childlessness that included a tax on those unmarried above 21 years from January 1, 1946 to November 29, 1956. It was later extended to those over 25 years of age until January 1, 1973 when it was repealed.