Tag: Switzerland

Three Cheers for Switzerland as Voters Reject Class-Warfare Tax Hike in National Referendum

I’ve always had a soft spot for Switzerland. The nation’s decentralized structure shows the value of federalism, both as a means of limiting the size of government and as a way of promoting tranquility in a nation with several languages, religions, and ethnic groups. I also admire Switzerland’s valiant attempt to preserve financial privacy in a world dominated by greedy, high-tax governments.

I now have another reason to admire the Swiss. Voters yesterday overwhelmingly rejected a class-warfare proposal to impose higher tax rates on the income and wealth of rich residents. The Social Democrats did their best to make the hate-and-envy scheme palatable. Only the very richest taxpayers would have been affected. But Swiss voters, like voters in Washington state earlier this month, understood that giving politicians more money is never a solution for any problem.

Here’s an excerpt from Bloomberg’s report on the vote.

In a referendum today, 59 percent of voters turned down the proposal by the Social Democrats to enact minimum taxes on income and wealth. Residents would have paid taxes of at least 22 percent on annual income above 250,000 francs ($249,000), according to the proposed changes. Switzerland’s executive and parliamentary branches had rejected the proposal, saying it would interfere with the cantons’ tax-autonomy regulations. The changes would also damage the nation’s attractiveness, the government, led by President Doris Leuthard, said before the vote. The Alpine country’s reputation as a low-tax refuge has attracted bankers and entrepreneurs such as Ingvar Kamprad, the Swedish founder of Ikea AB furniture stores, and members of the Brenninkmeijer family, who owns retailer C&A Group.

It’s never wise to draw too many conclusions from one vote, but it certainly seems that voters usually reject higher taxes when they get a chance to cast votes. Even tax increases targeting a tiny minority of the population generally get rejected. The only exception that comes to mind is the unfortunate decision by Oregon voters earlier this year to raise tax rates.

Switzerland’s Strong Human Rights Laws Should Be Emulated, not Persecuted

In a rational world, Switzerland would be a role model for other nations. It is quite prosperous thanks largely to a modest burden of government. There is remarkable ethnic and religoius diversity, but virtually no tension because power is decentralized (sort of what America’s Founders envisioned for the United States). Yet despite these – and many other – attractive features, Switzerland is being persecuted because of strong human rights laws that protect financial privacy. Money-hungry politicians from other nations resent Swtizerland’s attractive policies, and they would rather trample Swiss sovereignty rather than fix their own oppressive tax laws. An official from the Swiss Bankers Association provides some background in a New York Times column:

In Switzerland, this tradition of treating a client’s financial affairs in confidence became law in 1934 when it was codified in Article 47 of the country’s first-ever federal banking act as a contemporary reaction to the economic crisis, various domestic political considerations and well-publicized cases of espionage involving France and Germany. …Banking secrecy…reflects the very high degree of trust that exists between the Swiss state and its citizens and it has strong democratic foundations. …The Swiss are proud of their system and they reward it with a high level of taxpayer honesty. It works because the Swiss vote their own taxes, they have a high degree of control over the way tax revenues are spent and over all they believe their tax system to be reasonable, comprehensible, transparent and fair. …Doesn’t Switzerland hear the snapping jaws and cracking whips of foreign finance ministers, tax collectors, O.E.C.D. bureaucrats, cash-dispensing government agents and other denizens of the encroaching real world as they circle round Mother Helvetia intent on biting huge chunks out of her banking secrecy, if not swallowing it whole? …In March last year the Swiss announced they would give up the evasion-fraud distinction for foreign bank clients and adopt the O.E.C.D. standards on information exchange in tax matters. …However, requests for assistance must be made with regard to a specific individual, and “fishing expeditions” — any indiscriminate trawling through bank accounts in the hope of finding something interesting — remain ruled out. …Switzerland demonstrates to the world that it is possible for a state to collect taxes with a high degree of taxpayer honesty and without the authorities being corroded with suspicion about the financial activities of their citizens. Citizens in a democracy would never allow their police force to have an automatic right of forced entry into their homes just on the off-chance of finding some stolen goods, so why on earth should the state have an automatic right of forced entry into citizens’ banks accounts just on the off-chance of discovering some tax evasion? There must be a limit to the extent to which respect for an individual’s privacy is sacrificed on the altar of international cooperation in tax matters.

Sadly, the United States is part of the effort to create a global tax cartel. An “OPEC for politicians” would be terrible news for taxpayers, though, much as a cartel of gas stations would be bad for driviers. So-called tax havens play a valuable role in curtailing the greed of the political class. Ask yourself a simple question: Would politicians be more likely or less likely to raise tax rates if they knew taxpayers had no escape options?

The Swiss Minaret Ban: Some Things Never Change

minaretIn the Letter Concerning Toleration, John Locke wrote,

Nobody… neither single persons, nor Churches, nay, nor even commonwealths, have any just title to invade the civil rights and worldly goods of each other, upon pretence of religion. Those that are of another opinion would do well to consider with themselves how pernicious a seed of discord and war, how powerful a provocation to endless hatreds, rapines, and slaughters they thereby furnish unto mankind. No peace and security, no, not so much as common friendship, can ever be established or preserved amongst men, so long as this opinion prevails, that dominion is founded in grace, and that religion is to be propagated by force of arms.

A lot has changed since 1685, of course, but some things never will. Even today, the only way that people of different faiths (and of no faith) will ever be able to coexist in the same society is to divorce religion from state compulsion. Separation of church and state is a bargain that everyone can live with. It might just be the only bargain that treats everyone fairly, which is why it’s so important in a globalized, multiethnic world.

For the most part, we in the West have moved steadily toward Locke’s advice. This week the Swiss took a serious step backward:

In a vote that displayed a widespread anxiety about Islam and undermined the country’s reputation for religious tolerance, the Swiss on Sunday overwhelmingly imposed a national ban on the construction of minarets, the prayer towers of mosques, in a referendum drawn up by the far right and opposed by the government.

The referendum, which passed with a clear majority of 57.5 percent of the voters and in 22 of Switzerland’s 26 cantons, was a victory for the right. The vote against was 42.5 percent. Because the ban gained a majority of votes and passed in a majority of the cantons, it will be added to the Constitution.

The Swiss Constitution guarantees freedom of religion, but the rightist Swiss People’s Party, or S.V.P., and a small religious party had proposed inserting a single sentence banning the construction of minarets, leading to the referendum.

The Swiss government said it would respect the vote and sought to reassure the Muslim population — mostly immigrants from other parts of Europe, like Kosovo and Turkey — that the minaret ban was “not a rejection of the Muslim community, religion or culture.”

…Of 150 mosques or prayer rooms in Switzerland, only 4 have minarets, and only 2 more minarets are planned. None conduct the call to prayer. There are about 400,000 Muslims in a population of some 7.5 million people. Close to 90 percent of Muslims in Switzerland are from Kosovo and Turkey, and most do not adhere to the codes of dress and conduct associated with conservative Muslim countries like Saudi Arabia, said Manon Schick, a spokeswoman for Amnesty International in Switzerland.

“Most painful for us is not the minaret ban, but the symbol sent by this vote,” said Farhad Afshar, who runs the Coordination of Islamic Organizations in Switzerland. “Muslims do not feel accepted as a religious community.”

It’s transparently false to say that the minaret ban is “not a rejection of the Muslim community.” Of course it is a rejection of the Muslim community. It is a calculated, symbolic rejection. They didn’t go banning cloisters or mikvehs, after all. And because none of the existing minarets perform the daily calls to prayer, they can’t even say that the measure prevents noise pollution. (An excuse that would, if we were at all serious about it, ban Catholic church bells, while leaving the silent minarets untouched.)

As Locke might have observed, the Swiss ban on minarets isn’t going to calm religious tensions. It’s only going to make them worse, because now we know that the state is willing and able to use its power to disfavor a religion. It’s an open invitation, yet again, to everyone with a religious agenda: Use force, not persuasion. After all, that’s how they do it in (civilized, peace-loving) Switzerland!

Still more unfortunate is that Muslims feel the need to ask the government for acceptance in the first place. Someone should tell them that this is totally unbefitting a proud faith like their own, which should stand or fall on divine truth, not on popular referendum. A government that kept out of religious matters would neither restrict Islam nor feel the need to be falsely reassuring about it. And, under such a government, people of all religious persuasions would have a lot less to worry about.

Again, Locke is instructive:

Is it permitted to speak Latin in the market-place? Let those that have a mind to it be permitted to do it also in the Church. Is it lawful for any man in his own house to kneel, stand, sit, or use any other posture; and to clothe himself in white or black, in short or long garments? Let it not be made unlawful to eat bread, drink wine, or wash with water in the Church. In a word, whatsoever things are left free by law in the common occasions of life, let them remain free unto every Church in divine worship.

And, for the squeamish, Locke adds:

If anything pass in a religious meeting seditiously, and contrary to the public peace, it is to be punished in the same manner, and no otherwise, than as if it had happened in a fair or market.

Some things never change.

Superb Defense of Tax Sovereignty in New York Times

My friend Pierre Bessard of Switzlerand’s Liberales Institut has a column in today’s New York Times defending financial privacy from the predations of both international bureaucracies and American tax collectors. Pierre sagely notes that the Swiss system respects the privacy of citizens, unlike the “Orwellian” systems in places like America. This approach results in a very high level of tax compliance in Switzerland, and also provides a refuge for oppressed people around the world:

…for us here in Switzerland, our financial privacy laws are a foundation for individual dignity and basic property rights. Unfortunately, the confidentiality that is the hallmark of Swiss banking is coming under increasing pressure. … We think government exists to serve us, not the other way around. We understand that we have to pay taxes — and we do, with numerous studies showing that the Swiss are extraordinarily honest about paying what we owe — but we do not think it is the government’s role to intrude on our privacy and wrench them from us. …Today, Swiss citizens continue to vote on any tax increases in referendums (and sometimes even accept them). These healthy curbs on government contrast with the Orwellian concept of the “transparent citizen” whose every act is known to government. We see our system as a social pact between citizens and the state. Swiss privacy laws help preserve basic property rights. Bank secrecy was introduced in 1934, most notably to protect the identities and assets of Jews in Nazi Germany.

I make many of the same points in a three-part video series produced by the Center for Freedom and Prosperity. With so-called tax havens under increasing pressure, this is a good time to review The Economic Case for Tax Havens, The Moral Case for Tax Havens, and Tax Havens: Myths v Facts.

Three Cheers to Swiss Government for Resisting U.S. Fiscal Imperialism

Switzerland has better tax policy than America and a far stronger human-rights policy regarding personal privacy. This makes the IRS unhappy, since the tax police would like to find out if some Americans have overseas bank accounts.

In an odious display of fiscal imperialism, the Department of Justice is demanding that one of the Swiss banks divulge any information about American clients - even though this would mean imposing America’s bad law on a foreign institution operating on foreign soil.

Thankfully, the Swiss government has stepped in to ensure that the bank cannot be extorted.

Bloomberg reports:

Switzerland said it would seize UBS AG data to prevent the U.S. Justice Department from pursuing a U.S. court order seeking the identities of 52,000 American account holders in a crackdown on tax evaders. The assertion came in court papers yesterday in federal court in Miami, where the Justice Department sued UBS on Feb. 19, a day after the bank avoided U.S. prosecution for helping wealthy Americans evade taxes. The U.S. effort to enforce a summons seeking the names would force UBS to violate Swiss laws barring disclosure of such data, the filing said.

The Swiss government “will use its legal authority to ensure that the bank cannot be pressured to transmit the information illegally, including if necessary by issuing an order taking effective control of the data at UBS that is the subject of the summons,” according to the filing.

…“It is hoped that it will be unnecessary for the Government of Switzerland to take the extraordinary action of issuing an order to seize the information at issue, but such an action should be expected if the IRS continues to pressure UBS to violate Swiss law,” according to the filing.

Tax Oppression Index Ranks America in Bottom Half of Industrialized Nations

A thorough new study of 30 nations from the Institut Constant de Rebecque in Switzerland reveals serious shortcomings in America’s tax system.

The report, entitled “Tax burden and individual rights in the OECD: An International Comparison,” creates a Tax Oppression Index based on three key variables: the overall tax burden, public governance, and taxpayer rights. The good news is that the United States has a comparatively low aggregate tax burden, though America’s score on this measure would be much better in the absence of a punitively high corporate tax rate. The bad news is that corruption and inefficiency in Washington drag down America’s score for public governance. The ugly news is that America has a very low rating for protecting taxpayer rights — largely because politicians have tilted the playing field to favor the IRS, including the fact that taxpayers lose the presumption of innocence provided in the Constitution.

Here is a brief description of the study:

The OECD’s campaign against “harmful tax competition” and “tax havens” has overshadowed the essential issue, namely the important roles that both tax competition and “tax havens” play for capital preservation and formation, leading to higher prosperity and better protection of individual rights throughout the OECD.

The tax oppression index is based on 18 representative criteria measuring fiscal attractiveness, public governance and financial privacy in the 30 member states of the OECD. Switzerland appears as the country with the lowest tax oppression — due to a relatively low tax burden and a more [classical] liberal institutional order, including its citizens’ right to veto legislation, political decentralization, and protection of financial privacy. Germany and France, on the other hand, whose governments have supported the OECD’s efforts, are among the most questionable states in terms of safeguarding their residents’ individual rights.

…The tax oppression index evaluates the 30 OECD member states on three complementary dimensions quantified by 18 representative criteria, on the basis of OECD and World Bank data. The index enables relevant conclusions about the tax burden and individual rights among those countries.

Switzerland earns the top ranking in the report, followed by Luxembourg, Austria, Canada, and Slovakia. Italy and Turkey have the worst systems, followed by Poland, Mexico, and Germany. The United States is tied for 19th, behind the welfare states of Scandinavia. With Obama promising to raise tax rates and increase the power of the IRS, it may just be a matter of time before the United States is competing for the world’s most oppressive tax regime.

The Wonders of Socialized Dentistry

As we all know, the American health care system is less than perfect.  An inefficient amalgam of government spending, federal tax incentives, employer-based insurance, and private providers, the U.S. system costs us more than it should for the services provided.  Nevertheless, medicine in America remains far more directed by and for patients, in contrast to nationalized systems, which are usually organized by and for bureaucrats.

The results sometimes are horrific.  Indeed, the best way to understand the consequences of Britain’s National Health Service is simply to read stories in British newspapers.  Consider this one in the Daily Mail about  the lack of adequate dental care:

Like so many young women, Amy King always took great pride in her appearance.

Standing in front of the mirror to check her make-up before a night out, the 21-year-old would always try a smile - friends told her they loved the way it lit up her face.

Eight weeks ago, all that changed. The student from Plymouth was admitted to hospital where, in a single operation, she had every tooth in her mouth removed.

Obviously, not all foreign systems do so little for their patients.  France, Germany, and Switzerland all provide care differently, and in all of these nations people receive better treatment than in Britain.  But no where is turning health care over to government the best way to ensure quality yet affordable medical care.  Instead, control over health care should be placed back in the hands of those who have the most at stake:  patients.