Why all government in the world abolish the income tax and survive on the VAT /Service Tax Or only Transaction Tax ?

[JustAnotherNomad]

Yes, thank god.

I can already feel my blood pressure rising when I have‍ to read threads like this where people propose the best way to take other people's⁠ money to realize their ideological dreams.
It always starts like this. People don't understand that⁤ central planning has never worked and will never work.

Look into free private cities, there⁣ are a couple of initiatives. Try to find like-minded people, then you can start your⁢ own little experiment there. But please leave the rest of us alone.

 

[MiddleEuroAsia]

I'm sorry but I don't agree with you. Norway exports⁠ of oil is also very high, yet they still have one of the most stupidly⁤ high "progressive" taxes on earth, and the same goes for most Scandinavian countries. Not only⁣ that, showing any kind of wealth there is usually frowned upon, because how dare I⁢ show any resemblance of my hard earned money.
Yeah, it's a known fact that working conditions in the gulf is not︃ the best, and a lot of people have every right to be mad, but things︄ are starting to change and laws like kafala system are being abolished right now and︅ imo, that's a step in the right direction, However I'm more critical of western countries︆ that claims that they are the best of the best and muh land of the︇ free.
In murica, you find over 400,000 people that are living as modem slaves in︈ the land of the free, god bless America indeed.
https://www.theguardian.com/world/2018/jul/19/us-modern-slavery-report-global-slavery-index
well, 50 years ago there was︋ no UAE, it was nothing but undeveloped desert, however, everything changed after zayed found oil︌ 1966, and yeah it's pretty impressive what they have achieved in 50 years only.

and generally "Sharia law" countries have not really been known for technological or scientific advancements because︍ of the devastating effects of US colonialism and specially UK imperialism, they are still recovering︎ from their effects to this day.

Also, it's really easy for the US, UK, Canada️ and Australia to flaunt their "technological" advancements after they steal and do a lot of‌ shitty atrocities to the indigenous people, and guess what, their shitty treatment to the indigenous‍ people still happens to this day, also the recent discoveries of the horrible s**t that⁠ the Canadian government and the catholic church did to the natives' children's, speaks volume about⁤ these "first world" countries.

https://www.bbc.com/news/world-us-canada-57592243
A lot of European countries too had some this s**t⁣ with Belgium being one of the shittiest ones (killing more than 10 million Congolese⁢), I'm very glad that I was born in a European country that didn't have︀ any of that s**t, but I never take that for granted.

but yeah enough history︁ for today, I don't want to turn this thread into a history lesson lol

 

[MiddleEuroAsia]

No, just no. this is very counterproductive, like if I make a lot of money, I︃ would usually want to spend some of this money, and now they will punish me︄ for spending this money, which will led me to spend less and same will happen︅ with other people, which in turn will make the demand for goods less, which in︆ turn will make factories/companies produce less, which in turn will make companies let go of︇ some of it's employees, which in turn will lead to high un employment rate, add︈ to that that all of this would be extra devastating for countries that depends heavily︉ on consumption like the US or the UK.

just take progressive taxes capped at 10%︊ from both companies and individuals and leave people the f**k alone.

and I agree with︋ @JustAnotherNomad, these high tax countries have spending/budgeting program, not taxing problem. like the US︌ spending 700+ billion dollars for the military, when they have shitty healthcare (lol even some︍ third world healthcare is better than the American one lol), and ridiculously expensive education with︎ more than 40 million American have federal student debts.

With this kind of money, the️ US could be literally the perfect heaven on earth. but no mental gymnastics in the‌ world could justify the US ridicules spending on the military other than the US loves‍ to wave their dick and keep the military industrial complex relevant.

 

[James2774]

Governments aren’t in the business of reducing taxes.
They are a corporation basically with the‌ same interests as one. Any effort to reduce taxes is so my pandering for votes‍ and not in earnest.

 

[avalanche]

For people like Abramovich luxury tax will just become part of the price. He makes more⁠ money than he can ever spend. If by paying tax it means that he can⁤ get luxury item - he will and it wont stop him.

 

[khinkali]

This kind of approach can have a chilling effect on‍ the economy. People stop trading, buying, producing. This might be an environmental aim but it⁠ isn't the reality of Government policy, who need growth to be elected. That is why⁤ input VAT is refunded, so you only pay once and not at each part of⁣ the chain. I am confident they will go in a different direction...

Yes, envy is the future of taxation. The⁢ ProPublica article has spawned many articles, podcast episodes, etc. from mainstream press who are excited︀ over revelations such as "a multibillionaire and now the world’s richest man, did not pay︁ a penny in federal income taxes". Yet people who have any understanding of taxes know︂ that income taxes are based on income, not wealth.

Politicians like Senator Elizabeth Warren in︃ US, Rachel Reeves MP in UK and various envy-mongers in the EU will gain more︄ popularity. Wealth taxes are coming.

Of course wealth taxes don't work well. Wealth taxes force︅ elderly low income people out of their homes, destroy family businesses, lead to increased bureaucratic︆ costs and difficult valuation of illiquid or volatile assets and cause capital (and tax base)︇ to flow away. They were tried and repealed in Iceland, Denmark, Germany, Finland, Luxembourg and︈ Sweden. France scaled theirs back to just real estate (like Spain's) after a serious hit︉ to tax revenue. Switzerland is the outlier, but rates have been coming down and it's︊ gradually been replaced by income tax.

Places like US and UK haven't had a wealth︋ tax in living memory, so it will be a popular move to introduce it for︌ a few years, leaving the negative effects for future politicians to try to undo. We︍ can see from France's experience, it is easy to chase capital away but it is︎ not so easy to encourage it back.

 

[backpacker]

eek¤%& When - which canton - what village‍ (Gemeinde) - by how much?

Swiss wealth tax is one of the main pillars of⁠ the taxation system of the Confederation. It exists for ages. Every time an initiative tried⁤ to abolish wealth taxation in the past it has been denied by popular vote. Last⁣ plebiscite was in the late 90's where a certain group of so-called "financial experts⁢" (i.e. banks) came up with the idea to replace wealth taxation with CGT -︀ it was again denied.
Do not just look at national figures or cantonal figures. Wealth︁ tax is highly dependent on the village (Gemeinde) where you live. Differences are so signifiant︂ that very often people move just 5 kilometre to the next village where they can︃ immediately save 30% on their taxes.
Note: "Wealth" in this context is relative because in︄ CH this tax starts at a very low level. Nevertheless, this tax only has a︅ significant affect on very few people because the ordinary population keeps most of its savings︆ in 3. and 4. pillar accounts (3. and 4 Säule) which are tax free. Moreover,︇ Swiss wealth tax can be offset against interest taxation at source (Eidgenössische Verrechnungssteuer).

Nevertheless, it︈ is Swiss wealth taxation which will give the European Union and its members a pretext︉ to initiate a European wealth levy. Even though Swiss wealth taxation can hardly be compared︊ with anything what is/was known from its European neighbours and their (former) approach towards this︋ form taxation.

 

[khinkali]

@Bagpacker sorry I didn't mean repealed, I just mean the rates are low compared with‌ the suggestions we see now by some politicians in other countries. https://transforma.ch/wp-content/uploads/2021-tax-rates-switzerland.pdf

I didn't know about the local village rates. One more⁠ data point for the Laffer curve that wealth tax advocates deny existence of.

 

[backpacker]

@khinkali
Thank you for linking the brochure. What is listed there is absolutely correct and‌ it is one of the very few leaflets I have seen which takes into consideration‍ the fact that both income- and wealth-tax differ from village to village. That is the⁠ reason why in your brochure they list cantons on the left and the applicable village/town⁤ for the calculated rate on the right. For instance, Nidwalden (=canton) is listed with applicable⁣ rate for Stans (village). Would they have used Hergiswil (another village in Nidwalden) the rate⁢ would be much different (lower compared to Stans).
The system looks confusing at first glance.︀ However, it values diversity and takes into account the different needs and economic situation of︁ each village. It is one of the reasons why the popular vote has until today︂ prevented fundamental changes in the tax structure of the Confederation.

 

[JackAlabama]

sorry to be overly picky but its 2. and 3. pillar instead of 4., whereas the︉ 1. is the system from Germany, Italy and such.
(2. and 3. are mostly to︊ be great for banks who can push their expensive products and profit from gov mandated︋ savings and it is highly questionable if you are better of paying the taxes and︌ doing the wealth management of these pillars on your own).
Youre spot on with most︍ of the population being happy to outsource their money management into these pillars.
yep, the︂ thing which sucks the most in that regard is that you have to basically strip︃ naked and list all your assets making it potentially very easy for any future administration︄ to come and collect what they want when the going gets though.
However, that being︅ said, it is maybe is one of the only places in the world, where you︆ actually could do so without having to fear of for your life if you have︇ more than your average Joe.
The kings sphere is if you can get a lump︈ sum tax deal, whereas you just pay a yearly sum you have agreed to without︉ having to declare every gold tooth and grandmas silver coins.

 

[backpacker]

My bad. You are absolutely correct: 1. pillar = AHV/IV, 2.‍ pillar = BVG/UVG, 3. pillar = 3a (tied) / 3b ("free" 🙄). It is because⁠ of 3a and 3b why I am always confusing the pillars.
It has been ages⁤ since I last to had bother with 2. pillar and 3. pillar (took it all⁣ out and never looked back again 😛 ).
..... which makes sense when︀ you are very RICH (UHNWI), a foreign actor or foreign sportsperson. If you are just︁ a HNWI it is usually too expensive.
Add to it that it is no longer︂ available in all cantons + it is anyway only available to foreign citizens who do︃ not work in Switzerland + the population does not exactly like the idea of lump︄ sum tax deals for foreigners (hence it may get abolished in ever more cantons) I︅ am not sure if one should build his plans on such a system.

 

[JackAlabama]

yah good call of︄ cashing it. I would assume even MSCI world etf will have a better return than︅ what they offer you in these accounts 😉

Yep, the lump sum is steep and at︆ minimum a 100k bill if I recall correctly (Glarus, but who wants to live there︇ 😉 . Also not that sure, have not checked recently.

Not 100% sure about that but︈ Swiss may qualify if they have stayed abroad for 10 years before applying to lump︉ sum regime.

 

[backpacker]

"Return on invest" is certainly‍ not great.
However, the bigger problem is that you are at the mercy of the⁠ legislator. Restrictions today are much tighter than they were during my time and it is⁤ no longer an easy task to cash out before retirement age.
eek¤%& Do you really have to pay taxes when willing to live there ....⁣ nai¤%
I do︀ not know about that. And I have no intention to try it.
I am accustomed︁ to a life in cheap and shaky countries without too much bureaucracy. And I want︂ to keep it that way. A simple lifestyle means freedom fin4774"

 

[Alonzo]

Well said.

Also, the combination of low income tax + low wealth tax is working very︉ well in many cantons (especially in the middle of CH).

For example, Billionaire Jorge Paul Lemann is a︍ Swiss citizen and can not benefit from the lump sum regime but according to the︎ media, he lives in Rapperswil-Jona (the lowest area or commune in St-Gallen tax-wise). If he️ still earns a big amount of money as income, his total effective tax rate (against‌ his net taxable income) can go as low as 28%.
And don't forget that this‍ effective rate is Income Tax + Wealth Tax!

However, the tax rates in the⁠ western side of Switzerland are harsh. Geneva, Vaud and Bern for example are not nice⁤ at all. But luckily there is the lump sum tax regime in these cantons. Without⁣ this regime, pretty much no wealthy individuals would want to live there.
If you have like 100 million CHF or more it's︅ worth it. Otherwise, if you don't make substantial amount of income outside Switzerland then forget︆ it.
What I find weird is that Swiss Romandy is very leftist but yet they︇ didn't abolish the lump sum regime... Maybe when the next referendum comes out they will︈ likely abolish it.

If you own a very︋ expensive villa in Vaud for example, expect your final tax bill to be close to︌ 7 figures.

 

[M4S]

Exactly correct, most countries do not have a revenue problem just︄ a spending problem. That spending problem is mostly made up of waste or corrupt spending,︅ pure and simple.