Familiengeld und Kindergeld als Instrumente der Familienförderung

Abstract

In this article the consistency, redistributional effects and work incentives of the support payment for dependent children (Kindergeld) in Germany are discussed. The child benefit, although paid out as a lump-sum, does not lead to an equal monetary transfer per child. The transfer rather depends on the family-income, as the support is optional to taking tax allowances for dependent children (Kinderfreibeträge). Considering that child allowances are no tax benefits, but lead to an equal taxation of taxpayers with children and without, the remaining transfer, the net child benefit, depends on the families tax burden paid on the - otherwise tax-free - income needed for child maintenance. Due to the progressive income taxrate the tax surcharges are increasing with the income and the net-transfer per child decreases accordingly. This leads to disincentives to work for parents. The reasoning and general rules of distribution behind the optional child benefit remain unclear. The payment does not serve welfare purposes as it counts against the supplementary welfare benefits (Sozialhilfe), which secure a minimum income of the poor. The income related transfer also does not generally recognize the upbringing of children, e. g. to make up for disadvantages families face in some of the social insurances on a pay-as-you-go basis, above all the pension insurance fund (gesetzliche Rentenversicherung). The authors argue for a separation of both instruments - the child support payment and the allowances for children. In addition, the current disadvantages of families in the pension insurance fund demand systematic family oriented reforms within the pay-as-yougo system.