Could there be a progressive flat tax?
The basics of flat-rate taxation
As explained above, flat-rate taxation is not based on the goodwill of the tax authorities, but on the mobility of taxpayers. Some popular views and questions from this point of view are discussed here.
Charles B. Blankart 1. It has been known since ancient times: Mobile factors are difficult to tax. That is why Hesiod advised in the 8th century BC To be cautious about uncertain claims. He warns: "Fools who don't know how much more half is than the whole!" That is also true today. The tax authorities act wisely when it subjects foreign taxpayers, who can live anywhere because they live on capital and are therefore not tied to a job, to a reduced tax. 2. With flat-rate taxation, the cost of living in Germany and abroad is taxed, unless the income from domestic assets is higher. Foreign investment income is usually subject to proportional local taxation and is therefore considered taxed in Switzerland. 3. The flat tax corresponds to the standards of the Federal Supreme Court of a tax based on the performance principle. The court only demands that the tax is not degressive. Since the normal progressive rate of income tax and direct federal tax is applied to the flat-rate taxed persons and the foreign income is taxed proportionally through withholding taxes, the performance principle can be regarded as fulfilled. 4. Is the flat tax a low tax? No. The average flat-rate taxpayer pays almost ten times more direct taxes than the average Swiss. 5. Does Switzerland violate international law with its flat-rate taxation? No. There is a worldwide consensus that each state may tax its residents uniformly or separately at its own discretion. In addition to Switzerland, there are special taxes for mobile residents in Great Britain, Belgium and Austria, among others. Switzerland is therefore not a special case. 6. Shouldn't Switzerland make itself a refuge for flat-rate taxpayers? The flat tax can be abolished. But the losers are not primarily the flat-rate taxpayers who, thanks to their mobility, settle elsewhere, but rather financially weak municipalities, which improve their often critical financial situation by attracting flat-rate taxpayers and thus become independent of the cantonal financial equalization. 7. Is the flat tax an outgrowth of “excessive tax competition”? Whether it is still acceptable or excessive - Switzerland cannot resist international tax competition. Switzerland only has the option of adapting to it, making the most of it or standing aside and paying the price with declining tax revenues. 8. Should Switzerland follow a uniform model at least at the national level? There are three options for this: Either Switzerland could abolish the flat-rate tax throughout the country. The losers would then be (not only, but especially) financially weak cantons and municipalities who have to forego urgently needed income. Or: the flat-rate tax could remain in place throughout Switzerland as it has been up to now. Then those cantons that they want to abolish like the canton of Zurich would be snubbed. Or: An intermediate solution could be sought that would probably not satisfy either the opponents or the supporters. It is therefore advisable to leave the cantons with the autonomy that has already prevailed in the canton of Zurich since the 2009 vote. There is no point in countering international tax competition by creating an island of uniformity within Switzerland. On the contrary: autonomy gives the cantons the flexibility to deal effectively with international tax competition. 9. Does the flat tax drive up property prices? To this end, the overall immigration situation must be considered. Of the net immigration of around 100,000 people in 2008, there were only 400 flat-rate taxpayers. So the ratio is 250: 1. Realistically, there can be no noticeable price effect from this. This also applies if flat-rate taxees use somewhat larger properties than the average immigrant. 10. Does the flat tax suffer from the envy factor? Flat rate taxpayers are indeed wealthy people. Envy is allowed. Everyone can be grieved when their neighbors are better off. Envy is an object for politicians too. They get the voices of the jealous when they write on their program: "We want to piss off the rich, and first of all we want to abolish the flat tax." But whatever they write in the law, the redistribution does not take place because the target persons have already disappeared over the mountains when the tax collector arrives. Only the disadvantages for those who remain behind are permanent. 11. Is the flat tax being phased out? Abroad, it was often not understood that taxpayers should be treated with care. Legal uncertainty, combined with harsh orders and sanctions, has driven taxed persons with their accounts to Switzerland and other countries. With the end of banking secrecy, an obstacle has now been put in the way. An alternative for many is taking up residence with flat-rate taxation in Switzerland. The Swiss should not oppose such efforts with xenophobia. In a hate-hate game there are only losers. The foreigners, especially the Germans, cannot be that unbearable if 2,000 marriages between Germans and Swiss people are concluded every year. Which misanthrope wants to oppose such happiness?
Gy. ⋅ Charles Beat Blankart is an economist and, in addition to research and teaching, is repeatedly involved in economic policy debates. He was born in 1942, studied and did his doctorate at the University of Basel and then spent most of his scientific career in Germany, which he began in 1970 at the then newly founded University of Konstanz. He completed his habilitation in 1976, then became a professor at the Free University of Berlin, then at the University of the Federal Armed Forces in Munich (1978–1985) and at the Technical University of Berlin (1985–1992). After the fall of the Berlin Wall, he became one of the first professors at the reopened Humboldt University in Berlin, where he has held the chair for public finance since 1992. There were also numerous visiting professorships and research stays in Europe and America. Blankart has never lost scientific contact with Switzerland, has repeatedly taken up issues of Swiss economic and financial policy and also warned against taking prescriptions from Germany too uncritically. Conversely, in Germany he was very committed to Swiss values such as federalism, tax autonomy and direct democracy. In his textbook “Public Finances in Democracy” (7th edition 2008), for example, he brings the German public closer to many Swiss institutions. In addition, there are numerous articles and books on health care, federalism, the regulation of public companies and, for some years now, on over-indebtedness and insolvency problems of states and local authorities. Blankart has long been a member of the Scientific Advisory Board at the German Ministry of Economic Affairs and the Mont Pèlerin Society. After 40 years, he returned to Switzerland as a scientist in autumn 2009; he works in research and teaching at the university in his home town of Lucerne.
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