In Zurich and interested in taxation? Don't miss this! @Florian_Scheuer is one of the world's leading tax economists.
@Florian_Scheuer starts his inaugural lecture with quotes from US political candidates calling for much higher taxation on high incomes and wealth: 
Both income and wealth inequality have gone up a lot in the US. Top 1% earn as much as bottom 50%:
In Switzerland, income inequality is much lower, but wealth inequality has also increased:
This talk will now focus on taxation of the very rich. Who are they?
Fewer of Forbes 400 list today have inherited their wealth compared to a few decades ago. More tech billionaires.
Fewer of Forbes 400 list today have inherited their wealth compared to a few decades ago. More tech billionaires.
How are they taxed? There are different way of looking at it. Statutory (left image) or trying to estimate effective tax paid (right)
@Florian_Scheuer references the intensive recent debates on Twitter regarding the image on the right.
@Florian_Scheuer references the intensive recent debates on Twitter regarding the image on the right.
He stresses, that it's important to note that it's not just data. Making this requires underlying assumptions, which in this case are controversial. E.g. 2018 is just a projection for now, transfers are not taken into account. But we can still learn something from this.
At the very top, there seems to be a problem with erosion of the progressivity. It will take a couple of month for the profession to really understand what's going on in that graph, and may need some revisions, but overall problem of erosion at very top likely to stand.
In Switzerland, there is a similar phenomenon (research by @UniBasel_en economists Roller & Schmidheiny):
Laffer curve: middle shows revenue maximizing point. Where in that curve we think taxation is optimal depends a lot on political preferences as well.
Capital gains taxes are different. E.g. in US only pay when well the shares. If you die, you never pay and neither do the people who inherit the money.
50% to 60% of capital gains completely escape taxation because they are never realized during the lifetime of the owner.
50% to 60% of capital gains completely escape taxation because they are never realized during the lifetime of the owner.
Because of this, some in the US have proposed to introduce a wealth tax (similar to Switzerland, but with higher rate and only on bigger wealth).
Could this be a solution to the erosion of progressivity on the top?
Could this be a solution to the erosion of progressivity on the top?
Wealth tax would encourage reallocation from productive to unproductive entrepreneurs.
But wealth tax doesn't target excess profits from monopoly rents. Capital income tax does that. We need more evidence. So far it looks like the latter may be large. We see growing mark-ups.
But wealth tax doesn't target excess profits from monopoly rents. Capital income tax does that. We need more evidence. So far it looks like the latter may be large. We see growing mark-ups.
Other important levers are
- Getting rid of exemption for capital gains tax at death.
- Strengthening estate tax.
These are also important for equality of opportunity etc.
- Getting rid of exemption for capital gains tax at death.
- Strengthening estate tax.
These are also important for equality of opportunity etc.
To conclude: stakes are high. Inequality is important. We have the tools to address it. Getting this right is important.
There will be a video in a few days. I will post it when it becomes available.
