Today, a short break from the application of direct democracy in Canada; the Swiss wealth tax or, Switzerland direct democracy, again, shows the way

I will take this break because there is a lot of discussion about the so-called “wealth tax” some populists on the Left propose, some from the Right are also for it.

There are people on the Left who oppose it too, normally progressive rich people. There are also many rich people on the Right who oppose it. The rich who oppose the wealth tax are shortsighted. The rich of Switzerland seem smarter than the rich of other places,

Switzerland, again, shows that the Left-Right division is a fake division, that what is important is the issues.

As the Swiss people see it, since late in the 18th century, a wealth tax makes sense, it is a fair way to deal with an important economic and social issue.

You probably know it but, just in case, let me tell you Switzerland is, overall, the best run country in the World.

The Swiss have the World’s best democracy (to say there are better systems than democracy, like all totalitarians and authoritarians claim, is absurd because if humans do not freedom to speak, criticize the authorities and kick the authorities out of power by elections and override them with people-organised referendums, they are not living a full human life, even if they are wealthy).

By the way, forget also the silly rankings of democracies by The Economist, placing Switzerland in 11th place, it is a joke; Switzerland practices direct democracy (the people decide any issue they consider is important enough for the people to decide) at all levels of government, no other democracy does that. No country comes close to Switzerland in democratic quality.

The Swiss also have the World’s highest standard of living. They have attained it through smart hard work, with no natural resources.

They also have the best universal health care system in the World (the wealth tax does not seem to have hurt them in this regard either).

Their education system must be best in the World too, otherwise they could not have the best political system, the best economic system, the best universal health care system and even more “bests”.

On education, the famous PISA rankings of education systems are also out to lunch; they measure the performance of teenagers in math, science and language in a classroom. Anybody knows education is much more than the classroom and is much more than math, science and language, as the Swiss demonstrate.

I say all this also because it means that if the Swiss have a wealth tax, it is not harming Switzerland much.

It is interesting to note also that Ancient Greek Democracies also imposed a wealth tax on their richest citizens. Like the Swiss, the Ancient Greeks were way ahead in freedom; freedom to think, to choose rulers, to create in all fields, etc.

The Ancient Greeks were ahead even of all the West until the Renaissance, and still are ahead of most of the World, including several European countries.

So, if the Swiss do it and the Ancient Greeks did it, it is reasonable for others to conclude that perhaps a wealth tax is a rational measure.

One important reason the Swiss (even the wealthy), and the ancient Greeks too, consider a wealth tax reasonable, is because it helps create political stability by applying common sense (the highest form of human intelligence) to political and social stability; “people should contribute to society in direct proportion to their abilities and their wealth”.

But even in one area the Swiss have not caught up to the Greeks; during some of the brightest periods of Ancient Greek direct democracy, there were no taxes at all. The “tax” consisted in  the wealthy paying directly for public works. For example, if a new bridge was necessary, a local wealthy family would pay for it and give it to the city.

The family would not set up a toll booth and call it “another business center…”

In Switzerland, even people of the conservative, some say populist, SVP (Swiss People’s Party) feel the wealth tax is a fair tax, there is no debate.

But the Swiss know how to look at the details too, sometimes they seem to want Switzerland run as a Swiss watch. They decided, by tradition, because the wealth tax precedes most of the Swiss institutions of direct democracy, that all cantons (states or provinces) must impose a wealth tax but, to accommodate the particularities of each canton, the people of each canton decide the tax rate and how to apply it. In some cantons, if a wealthy person owns a donkey, they asses the donkey at 500 USD.

The wealth tax in Switzerland starts at low levels. For example, in the Canton of Zurich, you pay 0.07% (135 USD) tax if your assets (not income) amount to 200 000 USD. If your assets reach one million USD, you pay 0,21% (2,103 USD). At two million you pay 0.31% (6,144 USD). Most other cantons diverge little from Zurich’s levels.

You could think this would produce a “race to the bottom” on taxes among cantons, but it has not. Perhaps in a future blog I will write about why that race has not happened.

The Swiss seem to believe the wealth tax contributes to political stability by removing some of the hard earned privileges the rich enjoy. If the wealth tax helps promote political stability, the smart, not too greedy rich are happy with the tax too. They know that if the masses become angry, one of the people they go after are the rich.

So, there you have it; if you are wealthy and not too greedy you should support the wealth tax, it is in your own interest.

Of course, instead of the tax, it would be even better socially if today’s rich did like the rich in Ancient Greece during some periods; directly pay for public goods and services.

Would it not be great if instead of taxes, the rich voluntarily paid for building the new road or bridge?. We would put their name on them and thank them; much better than paying taxes.

In a way, the system is similar to what some rich people already do when they pay for a university buildings, etc.

In the US they could have the “Bill Gates Highway”, the “Jeff Bezos Hospital”, the “Elon Musk Power Station”, etc. In Canada we could have the “Weston Expressway”, the “Irving Museum”. In other countries they could do the same. I rather see Bill Gates name, or Musk’s, or even Rockefeller than a politican’s.

We could expand the system to corporations; they could also show social responsibility by financing public services; “GM Public Hospital”, “Goldman Sachs Assistance Program for Families on Welfare” (Other banks could join), etc. The responsibility of corporations has to go beyond the astound stupid sentence of Milton Friedman: “The Social Responsibility Of Business Is to Increase its Profits.”

It seems the US, Canada and most other countries could do worse than following the Swiss, and drop the foolish debate about the wealth tax.

In the next blog I will continue with the adoption of direct democracy in Canada and other places.

Victor Lopez

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