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Switzerland’s marriage tax penalty back in the spotlight

Summary:
Married couples in Switzerland are taxed together, unlike unmarried couples who are taxed individually. This often acts as a tax disincentive for one spouse to work, disproportionately affecting women. For many years, certain political parties have been pushing to remove what is essentially discrimination on the basis of marital status. The issue came back into the limelight this week in the run up to a 27 March 2024 deadline for the government to respond to an initiative on the subject, reported SRF. This week, the Federal Council presented a proposal to introduce individual taxation for everyone regardless of marital status. The proposal would have broadly the same impact as the initiative. The main difference is the initiative, if successful, would change the

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Married couples in Switzerland are taxed together, unlike unmarried couples who are taxed individually. This often acts as a tax disincentive for one spouse to work, disproportionately affecting women.

Switzerland’s marriage tax penalty back in the spotlight

For many years, certain political parties have been pushing to remove what is essentially discrimination on the basis of marital status.

The issue came back into the limelight this week in the run up to a 27 March 2024 deadline for the government to respond to an initiative on the subject, reported SRF.

This week, the Federal Council presented a proposal to introduce individual taxation for everyone regardless of marital status. The proposal would have broadly the same impact as the initiative. The main difference is the initiative, if successful, would change the constitution, while the Federal Council’s plan would only require legal changes. Because of the similarity, the Federal Council is rejecting the initiative and hopes those organising it will withdraw it.

The issue will now be looked at by a commission and discussed in parliament and the upper house.

The marriage tax penalty mainly affects those where each spouse earns between CHF 75,000 and CHF 125,000 per year. This affects around 450,000 working couples and 250,000 retired couples, less than 10% of the population.

The organisers of this initiative are also behind a similar one that aims to remove the unequal treatment of married pensioners who receive 1.5 times an individual state pension instead of 2 times.

Removing these inequalities is costly so how to fund them is a central question. In addition, imposing such changes at a federal level runs counter to the independence of cantons to decide on taxation matters.

At a media conference, Karin Keller-Sutter, Switzerland’s finance minister, said that the cantons, which would also have to support the introduction of individual taxation, were calling for a ten-year transition phase.


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