The end of income splitting for married couples? Klingbeil's reform plans and what's really behind them

It's the tax model that has stood like a cornerstone for decades – but now it's under serious threat. Lars Klingbeil, the powerful figure in the SPD, has an idea that's making many married couples sit up and take notice: he wants to abolish income splitting for married couples. Or at least restructure it so it no longer fits with the times. I remember discussions years ago when the topic was first treated like a taboo. Back then, the mantra was: "This is untouchable." Today, when the government has to watch every dollar, the situation suddenly looks different.

Why Klingbeil has income splitting for married couples in his sights

The reasoning Klingbeil gives is simple – but it hits the mark. The model, where married couples are assessed jointly and their tax burden is distributed like through a blender, dates from an era when the wife usually stayed at home and the husband was the sole breadwinner. Today, quite frankly, it's an anachronism. If you look closely, you quickly realise: Income splitting for married couples doesn't support the family, but rather a specific role model. It's hugely beneficial for couples with large income disparities – and in the vast majority of cases, that still means the classic setup where the woman earns less or doesn't work at all.

The SPD has long believed that this model is a real roadblock to equality. And the numbers back them up. I looked at one of the major studies on this a while back, published by a renowned economic research institute. It clearly shows: if you were to abolish income splitting for married couples, women's labour force participation would increase by an average of up to eight per cent. These aren't made-up figures; these are tangible effects. Suddenly, it wouldn't be worthwhile for many couples to have one partner stay home just to get the tax advantage.

What this means for the birth rate – the opposite of what you might think

Now here's the really surprising part. Supporters of the splitting model always say: "This is the backbone of the family, it secures children." But the reality looks different. A study I read back then in a specialist journal proved exactly the opposite. If the government no longer rewards unequal income distribution but instead invests in childcare options and genuine freedom of choice, the birth rate rises. It sounds paradoxical, but it's logical: couples are more likely to have children if they know they can both work without being penalised by the tax system.

So the current debate on reforming income splitting for married couples is no longer just about finances. It's about this question: does the government want to promote the traditional single-breadwinner marriage, or does it want to support modern living arrangements? I think many younger couples don't even have that classic idea in mind anymore. They're asking: why should I be penalised by the tax system just because we both work full-time and send our kids to childcare?

• Fact 1: Income splitting for married couples costs the government billions in tax revenue every year.
• Fact 2: It only benefits couples with large income differences – often those who least need it.
• Fact 3: Countries like Sweden or France have completely different models that boost both birth rates and female workforce participation.

The grand coalition of the Union and SPD? A stumbling block called the FDP

But this won't happen quickly. The SPD members know that too. Because while Klingbeil is gaining more support within the SPD, the Union sees it very differently. For the CSU, income splitting for married couples is practically a sacred cow. But even if they could agree in the next government, the FDP is lying in wait. The liberals have already made the model a top priority. For them, tax incentives for marriage are a core part of their economic policy. I doubt such a law would pass the Bundesrat without a massive fight.

But one thing also needs to be clear: simply abolishing it without alternative measures would be disastrous. If the splitting system is scrapped, other relief measures would have to be introduced. Otherwise, the middle of society would be the loser. And that's exactly what's at stake in the negotiations happening behind the scenes right now. It's not about abolishing it for the sake of it, but about a reform that ultimately is fairer. Perhaps a family splitting model that takes children more into account. Or a model that recognises actual care work, regardless of marital status.

I'll tell you this: the debate about income splitting for married couples will keep us busy over the next few months. Because it acts like a magnifying glass for the issues being discussed in this country right now: how do we want to live, how do we want to work, and what is that actually worth to the government? Stay tuned – it's going to be a heated autumn.