Swiss to vote on “millionaires’ tax.” Cue scare stories

On November 30 Swiss people will vote in a referendum on the so-called “lump-sum taxation” system, a preferential tax regime for certain wealthy foreigners who are resident in Switzerland but don’t work there. To simplify, the 5,000-odd people who qualify for this special tax regime get taxed according to their living and spending costs in Switzerland, rather than on their income. It is a very cushy regime for some.

Now despite all that Switzerland has done as a harmful tax haven, there is also a significant egalitarian streak in Swiss society and many Swiss people are fed up with mollycoddling the world’s rich. The new referendum would see the lump sum tax system, known as the “millionaires’ tax,” being abolished and those rich people would just pay their taxes like anyone else. It is a referendum on tax justice – at least as far as it goes.

Cue a raft of scare stories that all of Switzerland’s millionaires will decamp to Monaco and London if the referendum passes. We’ve seen these scare stories all before, the world over.

Opponents of the tax cite a study by two economists at the University of Lausanne and Humboldt University in Berlin, saying it will cost thousands of jobs. Swissinfo reports:

“The problem is that the study was not commissioned by the Federal Tax Administration, as the alpine canton group communiqué suggests but by Plus-Value Suisse, a private lobbying group that openly campaigns for maintaining lump sum taxation.”

And of course the scare stories rely on ridiculous assumptions, such as estimates that all – yes all – of the affected people will up sticks, rip their kids out of local schools, and leave Switzerland at the first whiff of tax. Experience shows that tax is usually some way down the list of wealthy people’s priorities.

And we’ll quote Frédéric Charpie, the national coordinator of the campaign for the abolition of lump sum taxation.

“In Zurich, villas that were evacuated by lump sum taxpayers, who often moved to neighbouring cantons, were then occupied by new millionaires, who paid more taxes.”

But don’t expect any of this to stop the scare stories. The livelihood of a few accountants and lawyers is at stake, and don’t expect them to accept this quietly.