Income splitting around the world – 2024
Nations vary widely. Some use the individual as the only unit of taxation and others require the household be the unit of taxation. Some permit choosing which to file as, individual or joint whichever the person finds saves the most money.
Some nations permit all family members to be included for the tax sharing while others allow this for married couples only. The single parent with a child can sometimes use family based tax, sharing with a child on the tax form.
Some nations permit joint filing but not income splitting. Over the years some nations have changed their tax style.
Those that prefer individual based taxation often say they do so to encourage women to be in paid work and therefore they create a disincentive for them to be home with the children. Some look at the loss of revenue the state has if there income splitting and they do not factor in costs of the state providing other programs such as daycare.
Those nations that permit sharing income jointly for taxation argue that this removes a bias between households, creating a horizontal equity -equally earning households pay the same tax. The households that permit filing jointly often do so to recognize the value to an economy of the unpaid caregiver role. The tax revenue government loses is seen not as loss but as investment to not have to spend as much money on programs to do care roles paid for by the state.
Here is a quick summary of tax situations :
Argentina -taxes the individual
Australia- taxes the individual
Austria- taxes the individual
Belgium- allows joint filing, gives family allowance for large families
Canada – taxes the individual -allows pension splitting but not income splitting
1962 Royal Commission on Taxation and the 1970 Royal Commission on the Status of women did recommend joint taxation be an option but they were not enacted
Chile -taxes the individual
China- taxes the individual
Costa Rica – personal income tax rates in 2022 was 25% or below
Czech Republic – taxes the individual
Czechia – taxes the individual, personal income tax rate in 2022 is 25% or below
Denmark- taxes the individual but permits transfers of tax reliefs between partners
Estonia- permits joint taxation for married couples, personal tax rate is under 26%
France- permits joint filing for couples, lets single parent share income with child
Germany- permits joint filing for married couples since 1980
Greece- allows joint filing
Hungary- taxes the individual and tax rate is 25% or below
Iceland – allows joint filing
Ireland- permits joint taxation for married couples since 1997
Italy- taxes the individual
Japan- taxes the individual, personal income tax rate is 55% or above
Luxembourg – allows joint filing since 1997
Mexico- taxes the individual
Norway- permits joint taxation since 1997
Poland -permits joint filing for married couples
Portugal- permits joint taxation for families
Republic of Korea – taxes the individual
Romania – taxes the individual
Russia- taxes the individual
Singapore- taxes the individual
Slovak Republic – taxes the individual, personal income tax rate is 25% or below
Spain -permits joint taxation for families
Sweden- taxes the individual since 1970
Switzerland- permits joint taxation for married couples
The Netherlands – taxes the individual but permits transfers of tax relief between partners
Turkey- taxes the individual
United Kingdom- taxes the individual as of 1989
United States – permits joint taxation for married couples
Income Splitting in Canada 