Sunday
(1)In the midst of a vast, arid desert of small-minded envy and zero-sum culture, there emerges a little oasis of cool, clear refreshing sanity:
The Swiss economy has faced hard times in the past few years. One canton, Schaffhausen, is doing something about it by changing its tax law to attract wealthy people. Beginning in January 2004, Schaffhausen will replace its system of increasing marginal tax rates on income with a system of degressive marginal rates. The cantonal tax rate will be set at just under 8 percent for income of SFr 100,000. It will rise to a peak of 11.5 percent for income between SFr 600,000 and SFr 800,000. Thereafter, the marginal rate declines with each incremental chunk of income: 10 percent at SFr 1,300,000; 8 percent at SFr 3,000,000; and just over 6 percent for income more than SFr 10,000,000. This is a true incentive-based tax system—the larger one's income, the lower one's marginal rate.
Seems that the penny (or the Franc) has dropped in one small corner of one small country. They have realised that penalising success is a pretty good way of guaranteeing failure.
Schaffhausen has its own legislative parliament, which contains eighty deputies representing all regions within the canton. Eight political parties compete for these seats. Evidently Schaffhausen's voters support a tax cut that gives the greatest benefits to the richest people. They believe that attracting wealthy individuals to reside in their midst is good for everyone.
And they are right.
[My thanks to Stephen Pollard for the link.]
Good news. Compare the mad, evil new and exciting justification of higher taxes from Lord Layard, most recently being boosted by John Naish in The Times yesterday under the heading "Happy Society".
Posted by Guy Herbert at November 16, 2003 04:56 AM
David,
Samizdata's new slogan :-
Guarantee failure, Penalise success.
Posted by Shaun Bourke at November 16, 2003 05:32 AM
I am confused (as well as ignorant). Are you saying that the head of an organisation will pay himself less if he knows that tax will take a big chunk out of it? This seems unlikely.
Posted by zack mollusc at November 16, 2003 08:34 AM
I wish the peak tax rate was everywhere 11.5%; never mind degression.
Posted by Jacob at November 16, 2003 10:23 AM
I hate this kind of tax personally, nothing fair or just about it... A Flat tax is the best, it's the most incentative and the most fair... here it is less incitative to get richer at the beginning and more latter on... in the end it give low tax to the poorer, low tax to the richer and put it all on the 600 000/800 000...
All they are doing here is to advantage one group of the population, the richer, at the expense of another, the 600/800...
And Btw, the desincitative effect of tax is often exagerate... it has an effect, but not that huge...
Instead of reducing work tax often only make fiscal evasion more attractive...
Posted by Ghaleon at November 16, 2003 03:12 PM
A pinprick of light, but not much more than. It's still icky nosy interfering unfair counterproductive social-engineering. Laissez faire it ain't.
Worse, while it advantages the Big Bosses, it makes it harder for a middle boss to graduate upscale. In terms of the ongoing standing-wave demographic of people-becoming-rich, they're eating their seed-corn.
Posted by Julian Morrison at November 16, 2003 04:54 PM
The fairest tax from a libertarian perspective is a poll tax. Everyone pays the same tax. If this was the case the people would demand small scale and efficient government.
Posted by Reid of America at November 16, 2003 05:17 PM
Reid of America writes:
"The fairest tax from a libertarian perspective is a poll tax. Everyone pays the same tax. If this was the case the people would demand small scale and efficient government."
No, the UK experience on two occasions in history now, is that they riot and demand an end to the poll tax. There is no such thing as a 'fair' tax, nor is there any such thing as 'efficient' government. All tax is welfare and liberty destroying extortion and all government is predation. Changing from one tax to another is neither here nor there, the only thing worth recommending from the libertarian point of view is that taxes be lowered and the scope of government reduced.
Posted by Paul Coulam at November 17, 2003 02:33 PM
