Why a Tax Initiative for Married Couples?
The Federal Council recently refused the initiative on taxes for married couples. The latter seeks to reduce the tax burden on spouses. In Switzerland, spouses are taxed together for direct federal tax on income and wealth. The incomes of both spouses are therefore added together and subject to a progressive tax scale.
For many, this means a significant increase in the amount of tax they have to pay, since the higher the income, the higher the amount deducted. Many couples feel penalized by this situation, hence the proposal for this initiative.
The Initiative's Main Objectives
The initiative on taxes for married couples aims to reduce the penalty taxation of spouses in Switzerland. The initiative proposes to maintain joint taxed for married couples, but wants to prevent the latter from being disadvantaged compared to unmarried couples.
If the calculation on a taxed does not balance the situation of the spouses, an alternative calculation can be made to avoid discriminating against married couples. This calculation should be based on the taxation applied to unmarried couples, with the smallest amount being favored.
Why Was the Initiative Rejected?
The Federal Council has decided to reject the Centre's initiative for a few reasons.
Joint Taxation Would Be Maintained
The initiative for fairer taxes for spouses proposes to maintain taxation of married couples on a joint basis, with an alternative calculation if necessary. However, the Federal Council wishes to remove the system of joint taxation for married couples, in favor of individual taxation, regardless of the individual's situation.
Complications for Ongoing Tax Reform
The Centre's initiative was proposed at a time when the Federal Council was already preparing a contradictory bill. Indeed, the indirect counter-proposal would allow spouses to be taxed not on a joint basis but on an individual basis.
In other words, a person, whether married or not, will always be taxed on his or her own incomewithout being added to a potential spouse's income.
Risks of New Inequalities
Although the importance of reducing the tax burden on married couples is recognized, the Federal Council fears that the Centre's initiative will end up putting unmarried couples at a disadvantage in favor of spouses.
The initiative on taxes for married couples is, on the other hand against taxation on an individual basis and would prefer to keep the calculation on a common basis.
Financial losses for the State
One of the reasons for rejecting this initiative is the potential loss of money for the state. Indeed, a reduction in tax revenue means less money for public funds , which serve many.
What is the Current Tax Situation for Married Couples?
In Switzerland, married couples are currently taxed like one person, while unmarried couples are not. The initiative on taxes for married couples sought to retain this model, with some changes.
In short, a married couple is taxed as a single entity. They file a joint tax return, whereas cohabiting couples are considered separately.
The Advantages of the Current Situation for Spouses
Married couples in Switzerland, although penalized on certain points, can sometimes receive a wedding bonus. This allows spouses to pay less tax. However, this bonus is generally only available if one spouse earns significantly more than the other in a married couple.
Tax disadvantages for married couples
As we have seen, many married couples are subject to higher taxes than unmarried couples. Couples with high incomes (between CHF 75,000 and CHF 125,000 per year) are particularly affected by this penalty.
A continuing debate
Between the initiatives to maintain joint taxation for married couples and the Federal Council's opposing plans for individual taxation, the debate on taxes for married people remains open.
As the Centre's initiative has so far failed, married couples are still taxed together. However, if the Federal Council's objectives are met, married couples could be taxed individually.
Frequently Asked Questions
Why was the initiative on taxes for married couples proposed?
The Federal Council recently rejected an initiative to reduce the tax burden of married couples. In Switzerland, married couples are jointly taxed for direct federal income and wealth tax. Their incomes are added together and then subject to a progressive scale, which can result in higher taxation.
What was the main aim of this initiative?
The aim of the initiative was to reduce the tax burden on married couples. It sought to maintain joint taxation while ensuring that spouses were not disadvantaged compared to unmarried couples.
How did the alternative calculation proposed by the initiative work?
If joint taxation resulted in a higher tax burden for a married couple, an alternative calculation method could be applied. This calculation was to be based on the taxation of unmarried couples, and the most advantageous amount was to be used.
Why did the Federal Council reject the initiative on taxes for married couples?
The Federal Council rejected this initiative for a number of reasons, including its opposition to maintaining common taxation, its impact on the ongoing tax reform, the risk of new inequalities and the potential financial losses for the State.
Why does the Federal Council want to abolish joint taxation?
In contrast to the initiative, which sought to maintain taxation of married couples on a joint basis with an alternative calculation, the Federal Council advocates individual taxation, where each person is taxed separately, irrespective of their marital status.
In what way would the initiative on taxes for married couples conflict with the tax reform in the pipeline?
The Federal Council was already working on a bill that would go in the opposite direction to the initiative. Its indirect counter-proposal proposes to tax each person individually, whether married or not, instead of adding the couple's incomes together.
How would the individual taxation proposed by the Federal Council work?
With individual taxation, each person would pay taxes on his or her own income, regardless of that of his or her spouse.
