The SPD, Greens and FDP have decided to combine various services for children.
(Photo: dpa)
Berlin It should be a core element of the social policy of a future traffic light government: basic child benefits. Both the Greens and the SPD had campaigned for this in their election programs. And it has also found its way into the result paper of the explorations drawn up jointly with the liberals: “We want to get more children out of poverty”, it says.
“In a restart of family support, previous benefits are to be bundled in a separate basic child protection model and paid automatically so that they reach the children without bureaucratic hurdles.”
But the concept is expensive, shows a report that has just been published and which the Ifo Institute prepared on behalf of the Greens in December 2020. Accordingly, the model of the Greens, who had already gone public with concrete ideas in 2019, costs between 27 and 33 billion euros, depending on the design. And it could have the undesirable effect in terms of labor market policy that parents would work less.
The proposed reform aims to bundle different family benefits such as child benefit, child allowance or social benefit in a uniform basic child benefit. The core is a fixed guarantee of 290 euros per month that each child receives. A Guarantee Plus amount is also paid out to families with low incomes, which slowly melts away as the parents’ income increases.
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Many parents, out of ignorance, forego benefits to which they are entitled
The basic child benefit should simply be paid out without having to submit applications to various authorities as has been the case in the past. In addition, the concept is intended to counter the problem that parents are often entitled to benefits such as child allowance, but do not take advantage of it due to ignorance.
The concept starts in the right place, says Ifo researcher Maximilian Blömer. “In Germany there are too many different benefits for families. It makes sense to straighten out the contradicting coexistence. ”Together with his colleagues Simon Litsche and Andreas Peichl, Blömer has calculated various models. The decisive factor is from which income limit of the parents and at what speed the Guarantee Plus amount melts.
According to the researchers’ calculations, a basic child benefit would reduce the risk of poverty rate by 2.5 to 3.5 percentage points. The promise made in the exploratory paper by the SPD, FDP and the Greens to bring more children out of poverty would therefore be fulfilled.
Parents who are unemployed or earn little are financially better off because they would get more money with the Guarantee Plus amount than in the current basic security system. Even in the middle income range, households with basic child benefits have more money at their disposal than today, because with the guaranteed amount of 290 euros they are better off than with the current child benefit. In families with very high earning parents, disposable income hardly changes or falls slightly.
Basic child security is a central aspect of the party’s social policy.
(Photo: imago images / Martin Müller)
The taxpayer would cost the basic child security – depending on the variant – 17 to 25 billion euros per year. This takes into account savings in other services and additional income in taxes. However, the new benefit would likely have an impact on parents’ employment behavior.
“With the basic child benefit, a given level of consumption can be achieved even with lower earned income, which in turn can benefit the time available for the family,” says the study.
If parents could hardly expect any loss of income due to the basic child benefits, even with reduced working hours, they could be tempted to work less and to devote more time to the family. However, this in turn has secondary effects such as lower income for the tax authorities and the social security funds.
Future government must be aware of interactions with parental transfer benefits
If you include this, the cost of basic child benefits increases to a total of 27 to 33 billion euros. Two years ago, when they were already campaigning intensively for basic child support and trying to push them forward with motions in the Bundestag, the Greens spoke of ten billion euros annually.
Even if the future government wants to remove benefits for children from the basic security, commonly known as Hartz IV, it still has to watch out for interactions with other transfer payments for parents such as unemployment benefit II or housing benefit.
Because otherwise there is a risk over wide income ranges that an extension of working hours or higher earnings due to transfer withdrawal elsewhere would ultimately lead to lower income, according to the report. “You have to be careful that the parents’ income is not counted too heavily,” emphasizes Blömer. The basic child benefits and the Hartz IV standard rates for parents should be well coordinated.
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