Parental Maintenance: Solidarity Contribution or Special Tax

Due to the swift ageing of the population and/or the rising life expectation of the German population, the number of persons in need of care is rising constantly. A growing number of persons with parents who need care are being obliged by the social welfare office to pay maintenance. The financial burden depends on which of both spouses is affected and how the spouses’ income is distributed. It is also questionable whether higher income lowers the need for maintenance support if assets are used to support parents. In his article on parental maintenance from an economic and taxation perspective, Karl-Heinz Tödter, former Bundesbank Director, proposes a reform that would remove existing reforms and bundle maintenance risks through joint tax assessment.