Swiss Government Rejects Proposed Super-Rich Inheritance Tax

(Bloomberg) — Switzerland’s government rejected a proposal to jack up inheritance taxes on the super rich, diminishing the chances of the plan passing in a national vote.

It was responding to a submission by the Young Socialists political group earlier this year to slap a 50% levy on inheritances above 50 million francs ($56 million) to raise money for tackling climate change. The final decision will be made by voters in a ballot that has yet to be scheduled.

In a statement Friday, the government said the higher taxes would damage the country’s reputation and potentially cost more revenue than they would raise.

While the Young Socialists managed to collect more than 100,000 signatures — the bar to trigger a plebiscite — the proposal also sparked multiple warnings from business-owning multi-millionaires and billionaires that they would relocate if it was introduced.

Citing a study for the tax authorities, the government said the new tax could raise more than 4 billion francs, all things being equal. But it estimated that more than three quarters of the potential fiscal revenue would be lost because those affected would leave Switzerland. An exodus of wealthy residents would also affect other income and wealth taxes, leaving the state worse off, it said.

“The initiative could lead to reduced revenues for the federal government and especially for the cantons and municipalities,” the government said. “It would also create the wrong incentives for climate protection.”

The proposal was made under Switzerland’s system of direct democracy, and the government had the option to reject or support it.

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