Follow Rajiv and watch his videos on Facebook and Twitter.

Rajiv Patel is economic attaché at the Embassy of India in Berne and business columnist for Swiss Radio and Television. He has a degree in finance from the University of Delhi and does management consultancy for large corporations worldwide. He enjoys cricket, sudoku and love songs.

Is Swiss «lump-sum» taxation immoral?

Dear Rajiv,

Is Swiss «lump-sum» taxation immoral?

Rohit K., Bangkok

War is immoral. Stealing is immoral. Adding pineapple to your curry, like the Swiss do with their riz casimir: that is really immoral. But taxation? My friend, that has nothing to do with morality. It’s simply a pragmatic measure which the rich put in place to prevent the poor from chopping them up and eating them for breakfast.

In most countries, taxes are based mainly on your income. The most common system is the so-called «progressive» tax rate: the more you earn, the more you pay. This reduces economic inequality. It also increases creativity, since everybody looks for inventive tax deductions. The richer you are, the more creative you become.

The Swiss lump-sum taxation regime is a wondrous invention. It is aimed at wealthy foreigners. Instead of basing taxes on the millions these big earners make in annual revenue, the Swiss fiscal authorities try to evaluate how much they spend. And you can only spend so much, right? Once they’ve seen your house and wife and three cars (but not your jet, as it is a company expense, of course), there’s not much more they can tax. So you just mix all these numbers in a sort of shapeless mass (a «lump»), apply a magic tax formula, and out comes a number, like a well-digested riz casimir, that makes everyone happy.  Any fool who is against this system is a traitor and should be thrown in a pit with the tigers, as almost every reasonable politician and editorialist in this country has pointed out in recent weeks.

So lump-sum taxation is brilliant. But what we need in this field now is some disruptive innovation. How about we abolish taxes altogether, and have UNESCO declare Switzerland a world heritage site for the rich and beautiful? Or a natural wildlife park? And if the poor people outside start getting a hungry look in their eye, don’t worry about an insurrection. All we need to do is close the gates. 

Follow Rajiv and watch his videos on Facebook and Twitter.

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