![]() ![]() The cantons and municipalities also impose their own local progressive income taxes, along with a net wealth tax and a parish tax. Thereafter graduated rates climb to a maximum of 13.2 percent, after which they fall to a standard rate of 11.5 percent on income exceeding SFr 715,600. It begins with a zero rate on income up to Swiss francs (SFr) 25,000 ($1 = SFr 1.37). The federal income tax consists of nine brackets. Personal income tax rates in Switzerland are progressive. As a result, individual tax burdens vary by canton and municipality. The cantons and municipalities, however, are free to set the amount of deductions and the tax rates. As of 2001, all the cantons were required to harmonize the concept of income and most of the deductions and allowances. Residents of Switzerland are subject to personal income taxes levied by the central government and also by the 26 cantons and 2,900 municipalities. But why not go a step further and improve incentives across the board by creating a degressive tax? Such an experiment is about to take place in Switzerland. I have argued that disincentives to work, save, and invest should be removed via a flat tax. As rising incomes are taxed at progressively higher rates, some individuals choose more leisure over additional effort. Most current tax systems, including the United States income tax, have built-in disincentives to work, save, and invest. ![]()
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