As noted previously, high-tax European governments are upset that taxpayers are fleeing to Switzerland. The economic aspects of this issue are important, but a BBC story raises two interesting philosophical questions. First, the socialist candidate for the French presidency accuses Switzerland of “looting” its neighbor. But this implies that individuals belong to the government and that they do not have the individual freedom and sovereignty to choose where they want to live. Second, the European Union’s Ambassador to Switzerland argues that low tax rates are a subsidy. This argument implies that income belongs to government and it creates a moral equivalence between an interest group that seeks to seize other people’s wealth through the political process and taxpayers who merely want to keep more of their own money. Sounds absurd, but read the BBC report:
Switzerland’s decentralised taxation system is causing irritation among its European Union neighbours. The row was triggered by the decision, late last year, of the French rock star Johnny Hallyday to leave France and take up residence in the Swiss Alpine resort of Gstaad. …In France, where Hallyday is a national icon, there is anger. Advisers to the French presidential candidate Segolene Royal have accused Switzerland of “looting” its neighbours. …Swiss cantons are allowed to set their own taxes and many are now engaging in an internal corporate tax-cutting competition. Canton Obwalden, in central Switzerland, slashed its corporate tax rate to just 6.6% at the start of 2006; it attracted 376 new companies in just 11 months. The European Commission has warned that this may constitute an unfair subsidy under the European Free Trade Agreement. “Talk to any tax expert,” said Michael Reiterer, the commission’s new ambassador to Switzerland. “This is recognised as a subsidy. And there we think Switzerland should think a bit whether behaviour which is clearly outlawed in the EU is the best policy to follow in such a close relationship between two partners.” …Stefan Kux, head of economic development for Zurich, is not the least bit worried by the complaints from Brussels, in fact he sees them as quite positive. “We are profiting from the mistakes of our neighbours,” he explained. “They are making economic promotion for us for free, everyone now knows that Switzerland has an excellent tax system, so I’m very grateful.” …within the Swiss government there is little patience with Europe’s objections over tax. “The Swiss position is on very safe ground,” insisted Adrian Sollberger, spokesman for Switzerland’s office of European policy. “We do not have an agreement to harmonise taxes, none whatsoever, so by definition there cannot be any infringement of any agreement between Switzerland and the EU.” …the Swiss government will not budge; ministers say they view an attack on the tax system as an attack on Swiss sovereignty. The row is sure to simmer on. Meanwhile the businesses and the celebrities just keep on coming.