Wealth tax ! Wealth tax ! Wealth tax ! Direct democracy, again! shows the way.

We all hear about the big fight in the US about the wealth tax. If other representative democracies discussed this issue; in places like Canada, the UK, etc., the decibels would be lower but not by much.

Representative democracy has a way to polarise everything. I believe it happens because in a representative democracy, politicians have so much power that they fight “to the death” to hold on to it, or to get it. Because the various lobbies also know that in representative democracies politicians have a monopoly, or duopoly, on power, they contribute lots of “donations” to political campaigns.

Lobbies are not stupid, they know that those in power could lose the election, that is why they “donate” to all major parties; it is an insurance policy.

In the US right now the discussion over the wealth tax is as aggressive as it can get. Those for it consider the rich a bunch of privileged cheaters who, ideally, should not exist but, since we have them we should tax them as much as possible.

On the other side we have those who say that a wealth tax will scare the rich away, and that would be terrible for the country because they would not want to live in the US, Canada, etc., and money for research, innovation, etc., would dry out.

But where are they going to go that offers them what they have in their countries know? Sure, some will move to Singapore, the Arab Emirates or Panama, but how many would want to live there and miss all the good stuff the US and Europe offer? the night life, the restaurants, the concerts, the ego-filing experience of being an important citizen in the most important country in the World? Let us face it, a billionaire in Singapore or Panama is not the same as in New York, Los Angeles, etc.

Yes, some would move to Switzerland because it is the most stable, most civilised country on Earth, is at the heart of Europe, not far from New York…, but, surprise! it has a wealth tax!.

The Swiss wealth tax generates 3.6% of all taxes in Switzerland, not bad.

At the same time, Switzerland is more pro enterprise than the US, Canada and the rest of them. It is also the place where many international billionaires choose to live.

One huge advantage the Swiss have over the Americans and the rest is that they have direct democracy. Direct democracy depoliticises politics because the people are the final authority on any issue, law, treaty, regulation or article of the constitution. Because the people decide, politicians realise that a big fight over the wealth tax or anything else would look ridiculous, it would be like children fighting bitterly over where to go for vacation when they know it is the parents who decide, not them.

To summarise, a wealth tax if perfectly reasonable, Swiss millionaires and billionaires have not moved to France, Germany or the US, In fact, quite a few from those countries move to Switzerland.

I do not know if the Swiss wealth tax has anything to do with it, but income tax in Switzerland averages 34.4%, in the US it is 37.7%. I bet those who claim for the wealth tax do not say anything about reducing income tax for most Americans. The sad and hard truth is that in the US, and to comparable extent in other representative democracies, neither the progressives nor the conservatives are interested in helping those on salaries.

If you demand direct democracy you could end up with a wealth tax for the rich and lower income tax for the average income earner. But you have to demand direct democracy, and never give up because American, Canadian, UK, etc., politicians, like Swiss politicians almost 200 years ago, no not want to give up the cash cow representative democracy represents for their grandiose plans, often devised to help the “donors”.

Victor Lopez

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