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Dear Germany, A little more tax equality. A lot more jobs?

Date

11 May 2021

Sections

Social Europe & Jobs

Moving to a system of individual taxation (from a joint or family-based taxation) would substantially increase the supply of labour in Germany, stimulate the economy and help reverse labour market gender inequalities, according to a report published by The Wilfried Martens Centre for European Studies and prepared on their behalf by the RWI – Leibniz Institute for Economic Research.

The new paper, Me, Myself and I: Could Tax Individualisation Create Jobs and Reduce Inequality?, shows the consequences of moving to individual-based income taxation in Germany. The study highlights that such a tax reform could reduce debt levels and spur economic growth in the face of increased public debt.

The report also highlights that a switch to individual taxation could help reverse gender inequalities in the labour market, which have been exacerbated as a result of the Coronavirus.

The paper recommends that:

  • Tax individualisation is a viable tool to create jobs, raise economic growth and reduce labour market inequalities.
  • Since such a reform produces winners and losers it could be accompanied by specific policies targeted at the potential losers of a switch to individual taxation.
  • The conclusions, although based on German data, also apply to other EU countries with joint income taxation, like France, Poland and Portugal.

The full report is available here: Me, Myself and I: Could Tax Individualisation Create Jobs and Reduce Inequality?

Notes to editors:

  1. The Wilfried Martens Centre for European Studies, established in 2007, is the political foundation and think tank of the European People’s Party (EPP). The Martens Centre embodies a pan-European mindset, promoting Christian Democrat, conservative and like-minded political values. It serves as a framework for national political foundations linked to member parties of the EPP. It currently has 31 member foundations and two permanent guest foundations in 25 EU and non-EU countries. The Martens Centre takes part in the preparation of EPP programmes and policy documents. It organises seminars and training on EU policies and on the process of European integration. https://www.martenscentre.eu
  1. About the authors and the editor:

 
Ronald Bachmann is head of the Department of Labour Markets, Education and Population at the RWI – Leibniz Institute for Economic Research and adjunct professor at the Düsseldorf Institute for Competition Economics (DICE) at Heinrich-Heine-Universität Düsseldorf: ronald.bachmann@rwi-essen.de
 
Philipp Jäger is a researcher at the Department of Macroeconomics and Public Finance at the RWI: philipp.jaeger@rwi-essen.de
 
Robin Jessen is a researcher at the Department of Macroeconomics and Public Finance at the RWI: robin.jessen@rwi-essen.de
 
Eoin Drea is Senior Research Officer at The Wilfried Martens Centre for European Studies: ed@martenscentre.eu
 
For more information please contact Eleftheria Katsi, Communications and Press Assistant: ek@martenscentre.eu

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