separate assessment of individuals
Replacing the joint assessment of couples by separate assessment of each individual
would eliminate the difference in the effective tax burden between the first and the second
earner.
However this reform is not compatible with the constitution. Incentives to supply
labour for the second earner could be improved in other ways. For example, a separate
tax-free allowance for second earners would reduce the tax wedge on the second earner,
and is thus a second best alternative worth consideration. Health insurance contributions
could be assessed on the basis of the number of adults who are insured. For example, in
Switzerland, adults pay a lump sum fee for compulsory health insurance and low-income
households receive a transfer from the government to cover for the full or for part of the
fees, depending on income.
EU Forecast
euf:ba18a:58/nws-01