They have no capital gains tax. Overall the wealth tax is a lower cost to individuals than the style of wealth taxes en-vogue in a lot of places now. Wealth taxes require liquidation of assets to pay, given the nature of wealth. When you liquidate assets, you pay cap gains tax and then have to pay the wealth tax. In Switzerland, you just pay the wealth tax. Basically, you have to be taxed to pay the tax in most places, where in Switzerland you just pay the tax without being 'double taxed'.
Liquidating assets to cover that tax works out to a lower overall tax burden on the individual than capital gains tax. Most nations that are mulling wealth taxes are considering them as an added tax layer, as opposed to the Swiss who use it as an indirect means to tax investments, rather than asking for a per-transaction gain payment. Nations that have done the approach that's opposite to Switzerland tend to reverse their wealth taxes, or see little benefit (France, for instance).
France is an interesting example. I believe their wealth tax targeted more than just the super rich and it led to a heavy exodus of millionaires from France. Also by not having an exit tax, it was easy enough for people to leave France to avoid this.
> France is an interesting example. I believe their wealth tax targeted more than just the super rich and it led to a heavy exodus of millionaires from France. Also by not having an exit tax, it was easy enough for people to leave France to avoid this.
It probably wouldn't work that way in the US, since it has an exit tax and it also taxes income globally regardless of where you currently reside (and I'd imagine any wealth tax would work similarly).
If I'm not mistaken, Switzerland the wealth tax hits everyone as well. The starting is something like 200K CHF. That said, the actual percentage is very low, like 0.2%. Having read a few bits of the Swiss tax code, I'd actually prefer to have this wealth tax like that over a cap-gains tax, since it would overall be a lower percentage of my capital asset appreciation than a CGT.
Liquidating assets to cover that tax works out to a lower overall tax burden on the individual than capital gains tax. Most nations that are mulling wealth taxes are considering them as an added tax layer, as opposed to the Swiss who use it as an indirect means to tax investments, rather than asking for a per-transaction gain payment. Nations that have done the approach that's opposite to Switzerland tend to reverse their wealth taxes, or see little benefit (France, for instance).