Which family types benefit from the hidden welfare states? Distributional patterns of family-related income tax systems in Europe

Most European welfare states employ a mix of policy instruments, including child- or spouse-contingent income tax benefits, to support families financially. However, the family types benefitting from these tax reliefs vary significantly across EU member states, revealing heterogenous distributional effects within the hidden welfare state component of their family policy systems. This study classifies the relative distributional outcomes of all 27 EU member states’ family-related income tax regulations in 2022, focusing on five distributional family policy effects: institutional, socio-political, poverty reduction, natalist, gender equality. Using EUROMOD, the study simulates tax liabilities for various family types, comparing the differences between effect-specific beneficiary and contrary family types to assess the strength of each effect. The results identify four distinct country clusters, primarily distinguished by the strength of the socio-political and the gender equality effects. These findings align with the importance of dual-earner and male breadwinner models in family policy regime classifications. Tax reliefs for families are an established component of family policy systems which are not exclusively familialising. Depending on their design, they can also support greater gender equality or have pluralistic distributional effects.