![]() The third is that, as a result, it encourages tax jurisdictions to undercut one another to attract wealthy taxpayers, which results in a race to the bottom. The second is that it scares away the wealthy. The first is that it discourages the accumulation of wealth. Simple theoretical arguments about taxation and incentives suggest that a tax on net wealth should have at least four negative effects. Switzerland is such a useful case study of the wealth tax because it achieves in practice something that in the abstract would seem impossible. And it is higher in other cantons in Geneva, a 1 per cent top marginal rate means every additional million owned will set its wealthiest residents back SFr10,000 per year. Heinz Tännler, Zug’s business-embracing finance minister, told me the wealth tax accounted for about one-fifth of Zug’s tax revenue from personal taxation. But the tax starts at a low threshold and it has to be paid year in, year out. It is admittedly a very small portion that is confiscated: with a top marginal rate of 0.3 per cent, each additional SFr1m ($997,000) the richest Zug residents put in the bank incurs an annual tax bill of SFr3,000. So last week, I went there to investigate more closely. I have long thought it is counterintuitive that Switzerland, best known abroad for welcoming the world’s wealth and its owners, is one of few countries charging a regular tax on residents’ net wealth in all forms. ![]()
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