Federal Council has adopted a dispatch on the popular initiative "Relieve the burden on wages, tax capital fairly
At its meeting on 6 March 2020, the Federal Council adopted the dispatch on the popular initiative "Relieve the burden on wages, tax capital fairly" (unofficially "99% initiative"). The Federal Council recommends that the initiative be rejected without a counterproposal.
According to the popular initiative, capital income should be taxed more heavily. The resulting additional income should benefit people with low or medium incomes.
In the view of the Federal Council, however, there is no need for action, as income before taxes and transfer payments is evenly distributed in Switzerland (especially in international comparison).
In the view of the Federal Council, the proposed instrument to reduce income inequality is not very well targeted, because the higher taxation is primarily related to the type of income and not to its level. Moreover, higher taxation of capital income would, among other things, make Switzerland less attractive as a business location.
The Federal Council also stresses that the financial impact of the initiative cannot be estimated. However, since capital income is highly tax-sensitive, the additional revenue hoped for by the initiative is unlikely to materialise to the extent forecast.
Further information and details can be found here.