Swiss hide their wealth under a bushel

Guess who this one belongs to? martinlittle.com

There are no fewer than 185,000 dollar millionaires living in Switzerland today, according to consultants Capgemini and investment bank Merrill Lynch.

In percentage terms, the number translates into well over two per cent of the population with personal assets (excluding primary residential property) worth at least SFr1.2 million.

However, the study also highlights an interesting social paradox.

If the mainstream media are a good guide to what people really think, then “excessive” management salaries are one of the country’s hottest social issues.

But there is an apparent dearth of public interest in the huge number of Swiss who are just “plain rich”.

So, where is all the money? A first-time visitor to Switzerland would certainly register many of the obvious signs of an affluent nation, but there is little of the so-called vulgar pomp that in many countries signals the presence of extreme wealth.

The privacy principle seems to extend well beyond banking, for instance to the world of property – Lake Zurich’s Gold Coast is dotted with beautiful and extravagant villas, but it is a labour of Hercules to find out who they actually belong to.

Hide the limousine

The Swiss attitude to wealth is well illustrated by an anecdote from legendary Swiss banker Hans Bär, co-founder of the country’s largest private bank, Julius Bär.

In his recent autobiography, Bär tells the story of how his family deliberately bought two identical limousines, in order to give the neighbours the impression that they only had one.

A hangover from Switzerland’s Calvinist past? Either way, it’s hardly a story you’d expect to hear about any of the Beverley Hills “elite”.

While many Swiss may still prefer to hide their wealth under a bushel, they are less hesitant when it comes to making sure they hang on to it.

Basel University economics professor Silvio Borner says the level of accumulated wealth in Switzerland, particularly among the elderly, is one reason why the country finds it so hard to push through much-needed economic reforms.

Borner told swissinfo: “In Switzerland, the elderly as a group are better off than the working population as a group. In canton Zurich, for instance, a recent study showed that every fifth couple over 65 now has a net worth of more than SFr1 million.

“Many elderly people, who also tend to vote more frequently, are quite comfortable the way they are and simply see no need to change – they expect either to live off what they have or to inherit.”

Giving it away

Passing on wealth in Switzerland is still easier than in many other countries – the country has nothing resembling a systematic inheritance tax.

While some such taxes do still exist, they are levied on a cantonal basis, and fierce “tax competition” between cantons has resulted in a “dismantling” of the system.

The centre-left Social Democrats now want to remedy that by introducing an inheritance tax at federal level – but only for amounts above SFr500,000.

Borner says the idea has a lot going for it from an economic point of view – it would be harder to evade, would produce relatively few “distortions” and is easier to justify in terms of social equity than other taxes.

However, he adds: “The problem is more practical. I fear that, no matter how hard you try to catch the very rich, they will always find a way round.

“There are simply too many clever tax lawyers, and much of the money will just leave the country.”

Creating waves

Media magnate Jürg Marquard, presenter of primetime TV reality show Dream Job, has recently attracted hefty public criticism for displaying his wealth.

His show is based on a US series in which billionaire Donald Trump publicly selects a candidate for a high-profile job, whilst simultaneously seizing the opportunity to trumpet his mega-wealth to millions of television viewers.

But the formula has received a mixed reaction in Switzerland, with television ombudsman Otto Schoch criticising Marquard’s “self-serving” display of his own wealth – from champagne parties at his sumptuous villa through to trips in his private jet.

Othmar Kempf, chairman of Swiss television’s Public Affairs Council, called the magazine publisher “aggressive and unsympathetic” and said Marquard was himself “the wrong man for the job”.

The programme’s makers, the Swiss Broadcasting Corporation, have also come in for criticism by the Federal Communications Office for infringing the sponsoring regulations.

In a statement on Wednesday, the office said there had been insufficient transparency in referring to the sponsor, a four-star hotel, during the programme. The same sponsor had also appeared in an advertising capacity, it said.

Status anxiety

While the super-rich may frown on such displays, common-or-garden “status anxiety” is not unknown among mere millionaires.

Traffic police in canton Schwyz are currently investigating a growing trend among the better-heeled inhabitants of the Zurich area.

While many well-off Zurich natives now prefer to live under the more favourable tax regimes of neighbouring cantons Zug and Schwyz, they are reportedly less keen to exchange their (canton-specific) number plates.

Under Swiss law, drivers who change their canton of residence have to apply for new plates within two weeks or face a sizeable fine.

But many “tax exiles” would apparently rather take that risk than admit publicly to their Zurich-based work colleagues that they actually care about the size of their tax bill.

swissinfo, Chris Lewis

Key facts

The number of Swiss dollar millionaires rose by 3.2% in 2004, according to the study.
Worldwide, the number of millionaires rose by 7.3% to reach a tidy 8.3 million.
Another study last year estimated that the combined wealth of the richest 100 people in Switzerland was nearly SFr370 billion.