Single income families are falling behind in Netherlands

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Single income families are falling behind in the Netherlands. Over the past years single-income homes paid relatively more tax than two-income households and that gap is only going to keep increasing, the Dutch office for economic policy analysis CPB said in a new report to the government. Single income households with children in particular pay more tax than similar two income households, RTL Nieuws reports.

Over the past years the Dutch government worked hard to make working more attractive by using various tax measures. Such as increasing the childcare allowance, the standard tax benefit for employed people, and the tax and premium discount for working people with young children - the so-called combination discount. These measures resulted in more families in which both partners have paid work. And because the first earner in such a family likely won't start working less, significantly higher income for these families. 

In 2017 the tax burden on a two income household with children and an income of 50 thousand euros was 22 percent. For a single income household with children and the same income, it was 29 percent. The CPB expects this will be about the same in 2030. Two income households with no children and a 50 thousand euro income had a tax burden of 28 percent last year. For single income households with no children it was 32 percent. By 2030 this will be 27 percent for two income households, and 34 percent for single income households.

The CPB asked the government how much it wants to continue stimulating two-income households now that the differences in disposable income are increasing. The CPB sees several options to decreasing this difference, like lowering childcare allowance and partially reversing other tax benefits. Though the office warns that this could result in women and mothers working less again and that is bad for their economic independence.