Switzerland’s wealth tax: low enough to keep the rich, high enough to confuse economists
A model for the U.S. that somehow also creates more millionaires.
The story
Switzerland has taxed personal wealth for over a century while also increasing the number of millionaires, with low rates that have not driven the wealthy away, unlike proposed higher taxes in California.
Source: fortune.com
Our reading
A Swiss wealth tax that’s low enough to not scare off the rich is now being held up as a model for the U.S. — even though the same system has also helped create more millionaires. It’s like a diet that doesn’t work, but somehow also makes you richer.
The math is simple: if you tax wealth at 0.24% for a couple with $2.5 million, you get $6,000 a year. If you tax it at 5% for a billionaire, you get $50 million. The difference is that the Swiss don’t seem to mind the rich staying, while Californians are already fleeing.
It’s not that the Swiss are naive — they just know that a 0.7% tax on $1 billion is a lot, but not a reason to move. Unless, of course, you’re a billionaire who’s never had to pay more than $7 million a year in taxes.
