This is direct democracy (second post)

As I said in the previous post, I am translating from French the documentation Swiss voters received from the Swiss government prior to the referendums of the coming Sept. 26.

This is when Swiss voters will vote on ,and decide, two issues; the legalisation of gay marriage and the level of taxation for salaries and capital.

Besides this documentation, Swiss voters acquaint themselves with the issue through traditional media, Internet, debates on TV and radio, and also through discussions with friends and family.

As you may be aware, in representative democracies, people do not often engage in political discussion with family and friends, because such discussions quickly become polarised. But this because in representative democracies, politicians and the media generate polarisation among the votes; you know, “righ-left”, “progressive-opposed to progress”, “good-bad”, etc. Rational discussion is not possible in such climate.

But polarisation happens because the media and politicians create such polarisation.

In Switzerland, the people do not discuss so much if approving gay marriage is “progressive” and not approving it is “backward”. Same goes for tax reform to increase taxes to capital and reduce taxes to salaries is “progressive” or “backward”, etc.

Because Swiss voters bear the responsibility for the effects of their actions, they look at the merits of each issue and the consequences of voting “yes” or “no”.

It is difficult to explain; it is a bit like the differences between an agitated discussion and a more calm, rational discussion anywhere on any issue.

I will now translate other documents Swiss government sends voters, and that include the positions of those for or against what the referendum proposes. To assist me with the translation I used DeepL.

As I translate, I add comments and clarifications to help those outside Switzerland.

“Distribution of income and assets”

In Switzerland, incomes before taxes and before receiving social benefits, are more balanced than most other OECD countries. The percentage of the population with the highest incomes receives a little more than 10% of the total income of the country.

There are indications that income inequality in Switzerland, before taxes and before social benefits has increased slightly in th past few decades. In relation with th total of incomes from salaries, the incomes from capital have remained stable during the same period.

If we consider the distribution of available incomes, meaning the disposable income of the population after taxes and after receiving social benefits, Switzerland is more or less average among OECD countries.

As far as wealth is concerned, the the portion of the total wealth in the hands of the wealthiest, has increased in Switzerland in the last  decades. In order to reduce inequalities among the population, redistribution takes place through taxation and social benefits.

Redistribution through taxes.

Concerning taxes, the people with the highest incomes pay proportionally more than those with lower incomes.

These taxes thus contribute to redistribution. For example, the top one percent of the population earns just over 10% of total income, but pays about 40% of the federal direct tax.

We should keep in mind that in Switzerland, the cantons (roughy similar to American states, German Landers or the Canadian provinces, but with considerable more power and autonomy) and municipalities collect the bulk of the income tax: here too, high-income earners pay proportionately more tax. For the one percent with the highest income, the share of cantonal income tax is lower than the share of federal income tax. This contributes to inequality.

Redistribution through social benefits.

In Switzerland, income redistribution takes place primarily through social benefits. Old-age provision, health costs as well as disability and unemployment insurance account for the largest share of social benefits. In total, spending on social benefits amounted to about 190 billion US dollars in 2018, which corresponds, more or less as in other prosperous Western countries. It amounts to about a quarter of the overall economic output.

This share has increased since the 1990s and has helped to counteract the growing economic inequality of recent decades.

Thanks to social benefits, including old-age pensions, fewer people are living below the poverty line: the share of the population that is poor in terms of income has fallen from over 30 percent to less than 10 percent. Inequality has not increased in terms of disposable income.

In my next post I will continue with Definition of Capital Income.

I hope this does not bore you; the idea is to convey to you the sort of information voters receive in Switzerland’s direct democracy to prepare themselves to vote to decide a specific issue.

As you can see, there is no comparison between the quality and tone of this information with the information voters receive to just elect politicians.

Victor Lopez

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