“Universal Child Benefit” Could Reduce Child Poverty in Germany
The introduction of an “inclusive universal child benefit” in Germany (“Teilhabegeld”) could reduce the poverty risk of millions of children, according to model calculations by the ifo Institute for the Bertelsmann Stiftung. “This could bring down the share of children at risk of poverty by as much as 11 percentage points,” says ifo expert Maximilian Blömer, the study’s author. The “universal child benefit” is a variant on the universal child allowance. Simulations show that it would primarily help single parents, poorer families, and families with many children. In its coalition agreement, Germany’s new federal government agreed to introduce a universal child allowance.
According to ifo calculations, the “inclusive universal child benefit” financed by taxes would cost the state EUR 10–24 billion per year. Moreover, many parents would reduce their employment or give it up altogether. This would eliminate between 398,000 and 705,000 full-time positions, further reducing government revenue from taxes and contributions. Overall, the total annual cost could rise to EUR 20–37 billion. “Depending on the level it is set at, a benefit like this also costs more,” Blömer says. “At this point, it’s still unclear how much the new German government is willing to spend.”
The “inclusive universal child benefit” would bundle and replace existing benefits, for example the child benefit and the child supplement. This would detach children from the unemployment benefit system. The higher the parents’ income, the lower the new child benefit. “It makes sense to simplify the various benefits for families by combining them in this way. However, a universal child benefit needs to be designed to coordinate well with other benefits, such as the planned unemployment benefit reform,” Blömer says.
The “inclusive universal child benefit” could be claimed by children and young people up to the age of 18, or up to the age of 25 if they are still in education or training. The child tax allowance would remain. There would be extra coverage for additional needs such as for separated families, disabilities, or illness.
More Information: Bertelsmann Stiftung.
Bertelsmann Stiftun (ed.): Maximilian Blömer, Wie wirkt das Teilhabegeld und was kostet es? Simulationsrechnung für ein Kindergrundsicherungsmodell (Download).
