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Swiss Study Examines Family Tax Systems

by Ulrika Lomas, Tax-News.com, Brussels

07 September 2012


Swiss independent consulting group INFRAS has recently conducted a study analyzing and comparing the tax and childcare tariff systems in the Swiss cantons of Basel and Zurich.

Following its analysis, the group concludes that the Basel tax system offers greater employment incentives for both double-income households and for single parent earners, as the tax deduction accorded for childcare costs is higher than in Zurich and as there is no additional tax burden on married couples.

INFRAS highlights Zurich’s plans to raise its childcare tax deduction, however.

On the whole, INFRAS reports that the employment incentives depend very much on the specific income levels as well as on the age and the number of children. In both Basel and Zurich additional employment particularly benefits low-income households with only one pre-school child or with two school children. It is also worthwhile in both cantons for single parent households to gain additional work.

According to INFRAS, the results show that the measures that have already been implemented to improve employment incentives have been effective, notably the increase in the tax deduction for childcare costs in Basel’s tax system.

The study shows that for families with two or more children of pre-school age and with a higher income, additional work is not worthwhile in many cases as the available income is not increased as a result, but is in fact less.

Concluding its remarks, the group underlines the need for action to be taken in both cantons, and for measures to be introduced that increase employment incentives for certain categories, in particular for middle- and top-income families with two or more pre-school children.

The group recommends further increasing the tax deduction for childcare costs and suggests that such costs be co-financed by the state or by private actors (companies and foundations).

TAGS: tax | Switzerland | tax breaks | individual income tax

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