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This article is based on the 2020 data from the Consumer Survey, which is described in more detail in the article on VAT progression. It is not intended to argue that taxation is a key part of decision-making regarding the acquisition or non-acquisition of children. Birth rate reduction is a complex societal issue with many factors related to values and opportunities. This examination does not provide a view or suggestions for a solution to the birth rate, but only takes a position on the allocation of taxation.
Proper Reviews
The review includes VAT, direct taxes and tax-like payments. The data I use do not include excise duties, as they are not yet available for the 2016 data from the national contribution-income tables. Excise duties include e.g. taxes on alcohol, tobacco and fuel.
Technically, VAT is paid on disposable income, but because of the overall tax rate, I look at it in relation to gross income, as direct taxes are paid on them.
Households are classified according to the number of children under the age of 18 into those without any children and those with one, two or at least three. Only childless couples and two-parent families are included in the comparison. Such households usually have two income recipients, which facilitates comparison.
The distribution changes, the overall tax rate remains
In euro terms, households with more children pay more for both direct taxes and VAT. In one- and two-child households, on the other hand, the differences are small.
- Households without children pay an average of around € 20,000 in direct taxes, while households with one child pay around € 23,000 and households with two children around € 24,000.
- VAT-free households pay an average of € 5,400, one-child households around € 6,000 and two-child households around € 6,300.
- In households with at least three children, the average amount of direct taxes is about 26,000 euros and VAT 7,500 euros. Having a proper ideas for the small business tax rate is also important there.
Households with more than two children also have, on average, higher incomes than childless or single-child households, which is why they pay absolutely more taxes. This could be thought to be due to the fact that more young parents with a first child are placed in one-child households whose income level has not yet stabilized. However, a closer look shows that the differences are not due to age structure.
However, in relation to gross revenue, the shares of VAT appear to be fairly flat, ranging between 7% and 8%. However, there appear to be differences in the proportions of direct taxes, although incomes are higher in households with more children (Figure 2).
For The Couples
Couples without children pay an average of 8 percent of VAT and 22 percent of direct taxes on their gross income. In one- and two-child households, the overall tax burden is similar, but VAT accounts for 7 percent of income and direct taxes for 23 percent.In households with at least three children, the overall tax rate is one percentage point lower; direct taxes account for 21% of revenue and VAT for 8%.
