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Munich – The abolition of tax classes III and V could lead to 67,000 full-time jobs. This was calculated by experts from the Munich Ifo Institute.

According to the analysis published today, there is still potential for increasing employment through further reforms in the tax and social systems. “Due to the wrong incentives, especially for women and older people, considerable employment potential has so far been wasted,” the experts complain.

The federal government decided to abolish tax classes III and V for married couples at the end of July. The reform is seen as a replacement for the abolition of the long-criticized tax splitting system for married couples.

In future, spouses will be taxed based on their individual wages in order to distribute the income tax burden more fairly. The Ifo Institute is also in favor of further changes.

“The tax and levy system in Germany can definitely be restructured to alleviate the labor shortage,” explained Volker Meier of the Ifo.

Possible measures mentioned include a transition from spousal splitting to family splitting, an end to the contribution-free co-insurance of spouses in statutory health and long-term care insurance and higher pension deductions for early retirees.

According to the experts, there is also potential in expanding childcare, especially in western German cities, where there is the greatest shortage of daycare places. The abolition of the retirement age of 63 is also mentioned.

According to the study, the biggest boost to employment would be an increase in the statutory retirement age from 67 to 69. According to Ifo, all of these reforms could create 1.2 million full-time jobs.

“In view of the aging population and the shortage of workers, our tax and social security system must consistently reward employment,” explained Meier. “Every incentive to work is important: whether it’s starting to work, working a few more hours a week part-time, or working longer until retirement because it’s more attractive – every extra hour of work per week counts.” © afp/aerzteblatt.de