Ed Philp here once again as a guest commentator, with the generous permission of Andrew.
As readers of the German media will have noted, Germans love to contemplate the problems facing their country. The problem often receiving attention at the moment is Germany’s declining birth rate – in a generation, the German social system will no longer have enough young Hansels and Jennifers to pay for the social benefits of the wrinkled Horsts and Gundruns. Ask any single female German with a university degree about some of the reasons why.
Short of appealing to patriotic duty (Germany tried that a few generations ago) or giving out subsidized certificates for candlelight dinners and red wine, there are some small steps one might think about here. One of them improbably starts with the German Federal Fiscal Court (Bundesfinanzhof – BFH).
The German income tax code allows a deduction for “exceptional hardships” (außergewöhnliche Belastungen) where a person is exposed to an unusual, unavoidable expense that could not otherwise be compensated for. The classic case is illness that is not covered by health insurance (e.g. AIDS in the early 90s); the deduction has also been granted for damage caused by natural disasters, the payment of ransom money in kidnappings and certain divorce costs (interesting comparisons are begged). In order to be deductible, the expenses must not be the result of the choice of the taxpayer (e.g. moving costs), must be highly unusual and must be justifiable in light of the reduction in tax revenue available for the community.
Recently the Federal Fiscal Court decided two cases involving the costs of in-vitro fertilization, which is the removal of an egg from a woman, the insemination of the egg, and the replacement of the fertilized egg into the uterus for carriage to childbirth. It’s a complicated – and apparently expensive – procedure. Two women sought to claim the “exceptional hardships” deduction for the costs involved in this procedure, both arguing that it was an unusual, unavoidable expense. German health insurance did not cover the costs of these procedures in either case.
In the first case, the woman M. was fertile and already had a child from a previous marriage. During that previous marriage, she had chosen to become sterilized She had a host of medical problems that prevented her from safely using any of the usual methods of birth control (condoms, pill, IUD – all apparently impossible) and did not foresee having more children. The first marriage didn’t work out; she divorced and remarried. Due to her sterilization, the in-vitro route was the only way to have a child with the second Mr. Richtig (Right). The BFH denied her the hardship deduction, reasoning that the fertilization costs would never had been incurred if she had not made the original decision to become sterilized. Apparently a healthy sex life isn’t a guaranteed constitutional right (think of the implications…state-sponsored trips to Mallorca!).
The BFH’s logic is debatable, especially since it is arguable that the sterilization was the direct consequence of medical conditions unique to that taxpayer (latex allergy, for example), and that the subsequent fertilization was the direct result of the original sterilization.
It is the second case that I find much more remarkable. In this case, H. was involved in a long-term relationship (eine feste Beziehung) with her partner. Although technically fertile, she too was unable to conceive – her fallopian tubes were just too narrow and the eggs did not “jump” as they were supposed to. She too underwent in-vitro fertilization. The BFH also denied her deduction, this time arguing that: the costs would be deductible for a married woman, but the German Basic Law allocates specific protection to “Marriage and the Family” (Article 6 of the Grundgesetz) and ‘general social opinion holds that a child is better off when it is conceived in the framework of marriage’ (court press release (G)). Therefore, this benefit could not extend to simple long-term relationships.
While some allowance can be made for the fact that a group of tax judges were called upon to make this decision (a tax court situated in conservative Bavaria), this decision smacks of three things. First, a sanctimonious and misplaced determination of child welfare. Second, a questionable subordination of the concept of “Family” in the German Basic Law to “Marriage”. Third, a disregard for the fact that the German Income Tax Code – and in fact, German society as a whole – otherwise provides numerous and significant benefits for the parents of children regardless of marital status. Finally, on a side note, it also completely precludes lesbian couples – who can’t be legally ‘married’ in Germany and by nature aren’t likely to conceive except through technical procedures like sperm donations or fertilization – from taking advantage of the deduction.
Whatever this decision is, it isn’t helping the population problem mentioned above either. Note that Germany also doesn’t acknowledge the common law relationship status available in many other countries which considers long-term couples to be married for tax purposes (recognizing that married or not, a shared economy of expense is practiced between two people). In that sense, this decision it at least somewhat “konsequent”.
Incidentally, if you want to see people getting married in real time in Düsseldorf, all you have to do is click here. Unfortunately, you can’t ask the happy couple whether they are simply doing it for tax reasons. But you can bet that something is a powerful incentive for them to get married in that awful room, which looks like the office of an undersecretary of production in a poor Eastern European nation.