Federal Council presents a study on individual taxation

The report submitted to the Federal Council examines three models of individual taxation:

• Pureindividual taxation: Pure individual taxation covers the income and assets of each person separately, regardless of marital status. No relief measures are envisaged for married couples with unequal income distribution.  
• Modifiedindividual taxation: Modified individual taxation relieves couples with unequal income distribution or simplifies tax assessments. Deductions are provided for this purpose (in the case of unequal income distribution, for single persons or single parents) as well as the flat-rate allocation of certain income components for married couples
• Individual taxation according to Ecoplan: Ecoplan proposes in principle to relieve households with children. For taxpayers with children, the parental tax rate according to current law should apply.

In the report, a qualitative (including constitutional conformity, global income taxation, budget situation, practicability) and a quantitative analysis of the models are carried out, i.e. the analysed models are placed on the same level in terms of revenue and two variants are examined. Variant 1 is revenue-neutral, i.e. the models cause neither additional nor reduced revenue compared to the status quo. Variant 2 is not revenue-neutral, i.e. the models lead to a reduction in revenue compared to the status quo.

First interim result: According to the analysis, the distribution of tax relief is comparable in both variants. For married couples with an equal distribution of income, a transition to individual taxation tends to lead to tax relief (the reverse is true for an unequal distribution of income). With modified individual taxation, the additional burden for married couples with unequal income distribution can be alleviated by a deduction. Because the child-relevant deductions are divided equally between the spouses, they can partly fall into the void depending on the constellation. The Ecoplan model leads to relief compared to the current law, especially for married couples with children. Pure individual taxation leads to tax relief for single persons without children. The modified individual taxation and the Ecoplan model result in an additional burden for this group of persons. In both variants, tax relief is mainly incurred by high-income persons. According to the proposal, all models should lead to positive employment impulses.

The complete media release and the outline are available here. The FDF is now to prepare a consultation draft by autumn 2022.