Does the Czech System of Financial Support to the Family Provide Any Incentive to Couples Remaining in Informal Prtanership?
Abstract
The article focuses on the issue of basic trends in fertility outside marriage and the financial support provided by the state to families with dependent children via the tax and social systems in the Czech Republic since 1989. The work was inspired by the facts that in the past two decades more children have been born outside than inside marriage.
The article therefore examines whether the systems have provided a financial incentive to cohabiting partners that could influence their decision to remain unmarried and it describes the basic changes in the tax system and to tax provisions. Both the tax and the social systems have undergone a broad range of changes since the year 1989.
Without a doubt, the introduction of joint taxation of married couples advantaged a married couple, as long as social benefits for households were not taken into consideration. In addition, the introduction of a supergross wage and a uniform tax rate of 15% did not make families with dependent children financially worse off.
Based on calculations reflecting the system in the year 2011, it is evident that abuse of the system by a fictitious single-parent family is of little benefit. There is some benefit in the case of low-income families if the child benefit and housing and living allowances are taken into account.