In September last year, members of the Swiss Socialist Youth (JSS) camped in front of the villas of multi-billionaire Magdalena Martullo-Blocher, in Meilen (ZH), and Ernesto Bertarelli, in the canton of Vaud. One way to draw attention to their 99% initiative (“Reduce taxes on wages, tax capital equitably”). The explanations of our guests are essential because the Swiss will vote on this subject after the summer. Opponents fear for family businesses and start-ups.
For a coherent and fair redistribution
Today, in Switzerland, capital income is advantageous. The income of large shareholders is only taxed at 60% – while ordinary citizens are taxed on all of their income. The popular federal initiative “Reduce taxes on wages, tax capital equitably” (or initiative 99%) puts an end to the injustice of the privileges granted to great fortunes.
The initiative calls for capital income (interest, dividends, etc.), above a threshold to be determined by Parliament, to be taxed 1.5 times more than labor income. Part of the additional tax revenue generated by the initiative will be used to reduce the taxation of low and middle income earners or to finance social benefits such as nurseries, health insurance subsidies or training.
The premiums of the sickness funds which increase each year, like the increasingly high rents, strangle the Swiss households. A job, even full time, does not automatically protect against poverty. The increase in inequalities creates an increase in the number of people threatened by precariousness, and also of people having to resort to social assistance benefits.
With the 99% initiative, the tax burden on low and middle income will be relaxed. Today Switzerland actively contributes to international tax competition and the unhealthy race for tax breaks for the richest. This is evidenced by the very recent decision of the Federal Chambers to abolish the issuance stamp duty on equity capital, a gift to large companies which will cost the Confederation around 250 million per year. This leads to austerity measures in several sectors – training, health, safety, etc.
The 99% initiative re-establishes the fiscal justice desired by the Constitution, which requires taxation to respect the principle of “economic capacity”. It is a means of fighting against austerity measures, against the power of international capital, and of implementing a more united taxation policy. In our society, women not only receive less pay. They are also doing unpaid work much more often. The initiative will protect and restore its place to work by taxing capital income. With the additional income derived from the initiative, we will be able to set up new nurseries as well as other reception structures. Discriminated by our economic and social system, women would thus benefit directly.
Coming from the ranks of the Socialist Youth, the initiative embodies the hope of new generations mobilized for social and environmental justice. Let us refuse with them the return to the world before! Let us call for a more just and equitable society by voting yes on September 21.
Initiative 99%: 100% arbitrary, 0% justice
The Swiss people will be called upon next September to vote on the so-called “99%” initiative launched by the socialist youth. This text provides for taxing at 150% the share of capital income exceeding an amount that will have to be defined later in the law. In other words, it is a question of taxing, in addition to the amount of income, a fictitious additional income which is not received by the taxpayer. However, the Swiss constitution provides that all taxpayers should be taxed according to their ability to pay; this implies that the tax burden must be adapted to the economic substance available to the taxpayer. However, by taxing income that is not collected by the taxpayer, the content of this initiative violates this fundamental constitutional principle. If the title of the initiative, resolutely demagogic moreover, may seem attractive at first glance, its text is particularly vague.
The initiators define very vaguely the capital income that would be affected. Potentially affected environments therefore do not know what to expect, and are therefore threatened by unpredictability. In reality, the initiative would reach well beyond the richest 1% of Swiss people. Crucial sections of the Swiss economy, especially SMEs and small investors, would go to the cash. Taxation of up to 150% of capital income would represent an excessive burden on entrepreneurs, who would be forced to continually tap into the substance of their business. Investments would therefore be hampered.
In addition, the acceptance of this initiative would call into question the federal law on the improvement of the fiscal conditions applicable to entrepreneurial activities and investments accepted in 2008 by the Swiss and Geneva people. Tackling this law, as the coronavirus pandemic hits the real economy hard, would strain the viability of many SMEs. In these particularly gloomy times, it is important to avoid increasing the tax burden on entrepreneurship. Billions of francs are now spent to protect SMEs from fatal outcomes. The implementation of this text would amount to taking back with one hand what the other hand had agreed to give. This arbitrary and harmful initiative will have no other consequences than prolonging the crisis for SMEs, which constitute the backbone of the Swiss economic fabric.