Editions

Recently, there has been lively debate about Switzerland’s role in international tax competition. The author of this article investigates the phenomenon of ‘socio-spatial segregation’, one of the effects of inter-cantonal tax competition. ‘Socio-spatial segregation’ refers to the geographical concentration of households which are similar in terms of criteria such as income, wealth, age or ethnicity.

Multinational companies benefit from lower effective tax rates than national ones. The disparities result from differences in bargaining power with the state. Larger firms are able to negotiate deductions with the tax authorities and thus reduce their individual tax burden.

Effectively taxing high-income businesses and workers is more difficult because of their global increase in mobility. According to a new study: Governments have consequently increased the income tax burden on the middle class. While, at the same time, the tax burden on top earners and businesses decreased.  

The high volatility of certain revenue categories confronted the Canton of Neuchâtel with budgetary policy problems in past years. Unexpected and sometimes significant changes made it difficult to conduct budgetary policy. In particular, unexpected revenue shortfall made it necessary to make adjustments to ensure compliance with the requirements of the debt brake. Therefore, the KOF recommends the implementation of a smoothing mechanism along with a budgetary rule based on the trend revenue.

Debt shifting is a strategy applied by multinational firms to shift profits from high-tax to low-tax countries. Because interest payments on debt are generally tax deductible, while opportunity costs of equity are not, multinational firms can reduce their overall corporate tax payments by financing a related affiliate in a high-tax country with loans provided by another affiliate located in a low-tax country. Mohammed Mardan explains in a new paper why thin capitalisation rules vary across countries.

One of the most important concerns of the new US Government is tax reform. High marginal effective tax rates, a laboriously defined tax base, complicated regulations and a large number of loopholes have led to high administrative costs. Discussions are focusing on destination-based cashflow taxation. This would ultimately place pressure on foreign companies to relocate production to the USA.

In mid-February, Swiss citizens will vote on the third corporate tax reform (CTR III). To mitigate the effect of lower tax revenues, the Swiss parliament decided in favour of an increase in taxes on dividends but against the introduction of a capital gains tax. KOF researchers have investigated which impacts an additional taxation on capital gains on gross domestic product, investment, employment, consumption and tax revenue could have.

In mid-February, Swiss citizens will vote on the third corporate tax reform (CTR III). KOF researchers have investigated its impact on gross domestic product, investment, employment, consumption and tax revenue. They have found that there are positive effects for the economy despite the tax revenue shortfall generated by the reform.

How high is the quality of the direct federal tax estimates provided by the Federal Tax Administration (FTA) and the Federal Finance Administration (FFA)? Commissioned by the two administrations, KOF has carried out a detailed analysis of the respective revenue forecasts. The results of this analysis show that, although the forecasts are generally unbiased, parts of the forecasts could be improved.