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Fair Taxation and Families
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A comparative study with a view to a more equitable income tax As governments develop and expand their activities, their reliance on financial resources keeps pace. Government allowances, social security and supplementary provisions proliferate and the complexity of arrangements for residents of EU Member States, and their interrelationships become increasingly obscure. This is equally true of income tax, creating scenarios in which remaining single or getting a divorce could be fiscally advantageous.

As governments develop and expand their activities, their reliance on financial resources keeps pace. Government allowances, social security and supplementary provisions proliferate and the complexity of arrangements for residents of EU Member States, and their interrelationships become increasingly obscure. This is equally true of income tax, creating scenarios in which remaining single or getting a divorce could be fiscally advantageous.

In a number of countries, unmarried couples who are living together are paying less tax compared to their married counterparts on a comparable income, and married couples with both spouses in paid employment are often paying less tax than a family with a single wage-earner. The traditional breadwinner model gets a raw deal. The fiscal effects of similar joint incomes can vary immensely, raising the question of how can individuals and families be included in an income tax system which is levied as equitably and justly as possible?

In this commentary, we will be searching for approaches to solving these apparent contradictions and, in doing so, we will examine the situation in several member states of the European Union (EU) in greater depth. Our approach will be confined to the fiscal treatment of individuals and families: in some countries fiscal facilities may be available to families with children, for example, instead of (free) healthcare for children or parental leave arrangements, or vice versa.

Outline

The first chapter describes the various income tax systems that are theoretically possible, the tax brackets and the income tax based on an individual income or family income. The final part discusses how income tax treats children.

The second chapter addresses the basic norms and the Christian principles which the government should embrace when it levies tax. The shift towards adopting an instrumental approach in tax law damages the underlying basic principles whose purpose is to share the burdens fairly.

The third chapter provides an outline of the situation in the Netherlands, and is followed by chapters describing the situation in Germany, England, France and Sweden. How do these countries approach the taxation of families and individuals and what kind of fiscal facilities are there for children? The final part compares the countries in an attempt to gain greater insight into their differences. The conclusion contains recommendations about income tax policies which could improve the way families and individuals are treated for tax purposes.

Responsibility

The second chapter was written by Jan A. Schippers, MSc; the other chapters were contributed by Léon van Kruiningen, MSc LLB. Wim Oppelaar, MA, from bureau ‘De Tekstwerker’ produced
the summary of the study. This publication was written at the request of Sallux with a view to stimulating discussion among involved Christians throughout Europe.