"Up to 70 Million Won Tax Bomb"... Switzerland Faces Intensifying Conflict Over 'Dual-Income Penalty'

"Tax Divorces" on the Rise: Dual-Income Couples Face Disadvantages
Debate Intensifies Over Shift to Individual Taxation, Revenue Loss, and National Referendum

In Switzerland, conflict is intensifying over the abolition of the so-called "marriage penalty" system, which imposes additional taxes on dual-income married couples.

A wedding photo unrelated to the article content.

According to the Financial Times on August 18 (local time), Switzerland requires high-income dual-income couples to pay more taxes than if they were unmarried. This can result in up to 40,000 Swiss francs (approximately 69.55 million won) in additional taxes per year. As a result, some wealthy couples are increasingly turning to loopholes such as "tax divorces" to avoid taxes, or holding "fake weddings" without officially registering their marriage.

Amid this situation, the Swiss Federal Assembly voted in June to replace joint taxation with individual taxation based on personal income, passing the measure by a narrow margin of 101 to 95. This reform applies only to federal taxes, and the government expects it will lead to an additional 60,000 people entering the labor market and a 1% increase in the country's gross domestic product (GDP).

Expanding women's participation in economic activities is a key goal of the reform. Since gaining suffrage in 1971, Swiss women have become more active in society, and the current female employment rate exceeds 80%. However, the proportion of women in full-time positions remains the lowest among OECD countries, highlighting the need for improvement.

However, there is significant opposition as well. Business circles and conservative groups point out that a revenue loss of 1 billion Swiss francs (about 1.7388 trillion won) per year at the federal and cantonal levels is inevitable. The Swiss People's Party (SVP), the Center Party, and the Evangelical Party are pushing for a national referendum to maintain the current system, calling the reform a "bureaucratic monster" that would drastically increase administrative burdens and disadvantage single-income households. They must collect 50,000 signatures within 100 days; even if they fail, at least eight cantons can force a referendum by invoking constitutional provisions.

In 1984, the Swiss Federal Supreme Court ruled that unequal taxation between married and unmarried individuals was unconstitutional. However, a similar reform proposal was rejected in a national referendum in 2016, so it remains uncertain whether the system will actually change this time.