More money in your pocket: Citizens’ money also for average earners. © Zoonar.com/Smilla72/Imago
A new citizen’s money reform proposal is being discussed. It would bring even average earners significantly more money.
Dortmund – A potential citizen’s benefit reform is emerging in Germany, which could not only put more money into the pockets of hundreds of thousands of average earners, but should also have a positive impact on the labor market and the state treasury.
Citizens’ benefit reform: average earners should also receive money
The reform proposal, which was developed in collaboration between the Ifo Institute and the Center for European Economic Research (ZEW) on behalf of the Federal Ministry of Labor, envisages a revision of the additional income rules in order to create incentives for longer working hours and improvements in income.
The proposed reform includes the following adjustments to the additional income rules for citizens’ benefit recipients:
- For the first 100 euros of additional income: No reduction in citizen’s benefit
- For additional income of 101 to 520 euros: citizen’s benefit reduction of 80 percent of income.
- For additional income of 521 to 2,000 euros: citizen’s benefit reduction of 70 percent of income. In the current system, the 70 percent rule only applies up to 1,000 euros in additional income.
- Over 2,000 euros in additional income: citizen’s benefit reduction of 65 percent of income compared to the previous 100%
Sample invoices from Focus Online make it clear that the reform would make many employees financially better off. These calculations show positive effects for singles, married couples and single parents with different gross incomes.
New citizen’s benefit reform should create incentives to work
If people receive citizen’s benefit and go to work, the state reduces their benefits. Until now, the principle was: the more you earn, the less citizen’s money you get. Experts say that although there will continue to be cuts, these should be smaller than before for higher incomes. This is intended to encourage benefit recipients to work longer and earn more money, like Focus Online reported.
The experts are optimistic: Citizens’ benefit recipients will receive more money, the state will save on expenses and the additional full-time positions will alleviate the labor shortage. Andreas Peichl from the Ifo Institute estimates that the reform could put around 136,000 people into work (further financial news on RUHR24).
Implementation of the citizen’s money reform proposal is not unlikely
Holger Stichnoth from ZEW emphasizes that the reform could potentially finance itself. As a result of the jobs created, public budgets could receive around 1.1 billion euros more in taxes and social security contributions.
The reform proposal has not yet passed. But according to Maximilian Blömer from the Ifo Institute, “the hurdles in implementation should be relatively easy to overcome”. He also agreed that the reform would be widely accepted by the population. This is supported by the results of a representative survey.
On the other hand, those who refuse to work will even have their citizens’ benefit canceled in the future. Because there is a risk of new penalties for citizens’ money.
2024-02-10 15:36:29
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