4 ms·

Switzerland has been following the suggested approach, and it seems to work well. There's no capital gains tax (for private investors), but a wealth tax instea

by Hermel 11y ago

Switzerland has been following the suggested approach, and it seems to work well. There's no capital gains tax (for private investors), but a wealth tax instead. Another advantage beside the mentioned incentive to invest is that tax revenues are less volatile.

_yosefk 11y ago
Interesting! How are they taxing "illiquid" assets like real estate, paintings or jewelry?
- MC7447a 11y ago
  Don't know about Switzerland, but in the Netherlands where there's also a wealth (or rather, net worth) tax, most property held for personal consumption (art, jewelry, cars, boats) are exempt. Their value in the aggregate is relatively low (compared to real estate and financial property), so the lawmakers decided it was not worth the hassle to tax those. Real estate is taxed separately, and municipalities run yearly appraisals. But I think that's pretty routine in most developed countries?
- Hermel 11y ago
  For real estate, each region is free to define their own valuation rules. In Zurich, either 70% of the previous transaction value is used, or a conservative value based on size and location, whichever is higher. This value is often also the basis for the self-rent-tax. (In Switzerland, the amount you could earn by renting out a self-inhabited property is taxed as income. Not doing so would give homeowners an unfair advantage in comparison to renters.) Paintings and jewelry are only taxed if they make an unusually high share of your wealth, i.e. if you are a collector. Again, the exact guidelines vary depending on where you live. Here are the official guidelines for valuing real estate in Zurich (in German): http://www.steueramt.zh.ch/internet/finanzdirektion/ksta/de/steuerfragen/liegenschaftenbewertung/_jcr_content/contentPar/downloadlist/downloaditems/247_1306239562487.spooler.download.1452004776538.pdf/15-502_per+1.1.2016.pdf http://www.steueramt.zh.ch/internet/finanzdirektion/ksta/de/... Note that you do not have to apply these rules yourself. Instead, the local tax office performs the calculation and notifies you about the result. If you disagree, this result can be contested, but generally, you do not need to familiarize yourself with all the details.
JoshTriplett 11y ago
Does Switzerland also have "exit taxes"?
- Hermel 11y ago
  You mean an expatriation tax? No.
chatmasta 11y ago
The problem with the argument "<Some Scandinavian country> implemented this policy, and it works great" is that it assumes a policy that succeeds in one country will succeed in any other. Switzerland is vastly different from a large country like the United States. Consider just a few factors: population size, geographic area, and ethnic homogeneity. Switzerland population is 2% the size of the United States population. Its land is 0.5% the size of that of the United States. Perhaps most importantly, Switzerland is far more ethnically and culturally homogenous than the United States. The gene pool of Switzerland traces back centuries; America is a nation of immigrants. The cultural homogeneity of Switzerland removes any friction in policymaking due to cultural disagreements or economic disparity. [1] Implementing a new policy in Switzerland is rightfully much easier than implementing one in the United States. The constraints of Switzerland allow more flexible bureaucratic structures and policymaking, with more predictable results, than the constraints of the United States. A policy that succeeds in Switzerland, a geographically small, culturally homogenous area, may not succeed in the United States, a geographically large, culturally heterogeneous area, for any number of reasons arising from these differences. Only an irresponsible argument would compare policy success across the two countries without first acknowledging their vast differences. [1] https://www.washingtonpost.com/news/worldviews/wp/2013/05/16/a-revealing-map-of-the-worlds-most-and-least-ethnically-diverse-countries/ https://www.washingtonpost.com/news/worldviews/wp/2013/05/16...
- Hermel 11y ago
  Yes, it is harder to implement changes in a large system than in a small system. However, you should note that Switzerland is more culturally diverse than the United States by a number of metrics, including immigration. For example, 25% of the Swiss population are foreigners, three times as much as in the US. Also, Switzerland has three official languages. Consequently, there is no national TV station or newspaper that can reach the whole country at once. But if it helps you, I'd like to mention that France also has a wealth tax and that Germany had a wealth tax until 1997.

by Hermel 11y ago

_yosefk 11y ago

Interesting! How are they taxing "illiquid" assets like real estate, paintings or jewelry?

MC7447a 11y ago
Don't know about Switzerland, but in the Netherlands where there's also a wealth (or rather, net worth) tax, most property held for personal consumption (art, jewelry, cars, boats) are exempt. Their value in the aggregate is relatively low (compared to real estate and financial property), so the lawmakers decided it was not worth the hassle to tax those. Real estate is taxed separately, and municipalities run yearly appraisals. But I think that's pretty routine in most developed countries?
Hermel 11y ago
For real estate, each region is free to define their own valuation rules. In Zurich, either 70% of the previous transaction value is used, or a conservative value based on size and location, whichever is higher. This value is often also the basis for the self-rent-tax. (In Switzerland, the amount you could earn by renting out a self-inhabited property is taxed as income. Not doing so would give homeowners an unfair advantage in comparison to renters.) Paintings and jewelry are only taxed if they make an unusually high share of your wealth, i.e. if you are a collector. Again, the exact guidelines vary depending on where you live. Here are the official guidelines for valuing real estate in Zurich (in German): http://www.steueramt.zh.ch/internet/finanzdirektion/ksta/de/steuerfragen/liegenschaftenbewertung/_jcr_content/contentPar/downloadlist/downloaditems/247_1306239562487.spooler.download.1452004776538.pdf/15-502_per+1.1.2016.pdf http://www.steueramt.zh.ch/internet/finanzdirektion/ksta/de/... Note that you do not have to apply these rules yourself. Instead, the local tax office performs the calculation and notifies you about the result. If you disagree, this result can be contested, but generally, you do not need to familiarize yourself with all the details.

JoshTriplett 11y ago

Does Switzerland also have "exit taxes"?

Hermel 11y ago
You mean an expatriation tax? No.

chatmasta 11y ago

The problem with the argument "<Some Scandinavian country> implemented this policy, and it works great" is that it assumes a policy that succeeds in one country will succeed in any other. Switzerland is vastly different from a large country like the United States. Consider just a few factors: population size, geographic area, and ethnic homogeneity. Switzerland population is 2% the size of the United States population. Its land is 0.5% the size of that of the United States. Perhaps most importantly, Switzerland is far more ethnically and culturally homogenous than the United States. The gene pool of Switzerland traces back centuries; America is a nation of immigrants. The cultural homogeneity of Switzerland removes any friction in policymaking due to cultural disagreements or economic disparity. [1] Implementing a new policy in Switzerland is rightfully much easier than implementing one in the United States. The constraints of Switzerland allow more flexible bureaucratic structures and policymaking, with more predictable results, than the constraints of the United States. A policy that succeeds in Switzerland, a geographically small, culturally homogenous area, may not succeed in the United States, a geographically large, culturally heterogeneous area, for any number of reasons arising from these differences. Only an irresponsible argument would compare policy success across the two countries without first acknowledging their vast differences. [1] https://www.washingtonpost.com/news/worldviews/wp/2013/05/16/a-revealing-map-of-the-worlds-most-and-least-ethnically-diverse-countries/ https://www.washingtonpost.com/news/worldviews/wp/2013/05/16...

Hermel 11y ago
Yes, it is harder to implement changes in a large system than in a small system. However, you should note that Switzerland is more culturally diverse than the United States by a number of metrics, including immigration. For example, 25% of the Swiss population are foreigners, three times as much as in the US. Also, Switzerland has three official languages. Consequently, there is no national TV station or newspaper that can reach the whole country at once. But if it helps you, I'd like to mention that France also has a wealth tax and that Germany had a wealth tax until 1997.