Now showing 1 - 9 of 9
  • Publication
    Wealth-Income Ratios in Free Market Capitalism: Switzerland, 1900-2020
    ( 2023) ;
    Isabel Z. Martínez
    Abstract We show that over the 20th century, in Switzerland the ratio of private wealth to national income, βpt, did not follow a U-shaped pattern, thereby contrasting the evolution in most European countries. Instead, the ratio was exceptionally stable at around 500%. We argue that this consistently high βpt was the result of geopolitical factors combined with Switzerland's capital friendly policy-making. Since the turn of the century, however, βpt has been on a rapid rise to reach 793% in 2020. This exceptionally fast increase is mainly driven by large capital gains, especially in housing wealth.
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  • Publication
    Inequality and Growth
    ( 2023) ;
    Reto Foellmi
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  • Publication
    Tracking and Taxing the Super-Rich: Insights from Swiss Rich Lists
    ( 2022-11-23) ;
    Martinez, Isabel
    We collect, digitize, and supplement the Swiss rich list for the years 1989–2020 published in the “BILANZ” business magazine to gain new insights on the structure and dynamics of top wealth in Switzerland. Using this data allows us study the the super-rich in Switzerland in ways that were not possible in previous research based largely on tax data. In addition to making this valuable data source accessible for future research, and also discussing its limitations, we make three distinctive contributions to the literature. First, we present a number of new facts on the wealth elite in Switzerland. We show that about 60% of the super-rich are heirs—a much larger fraction than in the United States where many of the super-rich are self-made—and that five in ten super-rich residing in Switzerland are foreign-born. Second, we estimate the sensitivity of the location-decision of super-rich foreigners to a preferential tax scheme that offers wealthy foreigners to be taxed on their expenses rather than on their true income and wealth. We are the first to evaluate this policy—similar to “non-dom” taxation that exists in other countries like the UK or Italy—and show that when some of the Swiss cantons abolished this practice, they lost about 30% of their stock of super-rich taxpayers. Third, we use the wealth series compiled in our BILANZ dataset to estimate the wealth shares of the top 0.01% in Switzerland and show how they compare to earlier estimates by Föllmi and Martínez (2017) based on wealth tax data. We find that top wealth concentration is higher than previously assumed, an conclude that top wealth shares based on tax data constitute a lower bound, while the estimates based on our BILANZ data are upper bounds.
  • Publication
    Tracking and Taxing the Super-rich: Insights from Swiss Rich Lists
    We collect, digitize, and supplement the Swiss rich list for the years 1989–2020 published in the “BILANZ” business magazine to gain new insights on the structure and dynamics of top wealth in Switzerland. Using this data allows us study the the super-rich in Switzerland in ways that were not possible in previous research based largely on tax data. In addition to presenting this valuable data source, and also discussing its limitations, we make three distinctive contributions to the literature. First, we present a number of new facts on the wealth elite in Switzerland. We show that about 60% of the super-rich are heirs—a much larger fraction than in the United States where many of the super-rich are self-made—and that five in ten super-rich residing in Switzerland are foreign-born. Second, we estimate the sensitivity of the location-decision of super-rich foreigners to a preferential tax scheme that offers wealthy foreigners to be taxed on their expenses rather than on their true income and wealth. We are the first to evaluate this policy—similar to “non-dom” taxation that exists in other countries like the UK or Italy—and show that when some of the Swiss cantons abolished this practice, they lost about 30% of their stock of super-rich taxpayers. Third, we use the wealth series compiled in our BILANZ dataset to estimate the wealth shares of the top 0.01% in Switzerland and show how they compare to earlier estimates by Föllmi and Martínez (2017) based on wealth tax data. We find that top wealth concentration is higher than previously assumed, and conclude that top wealth shares based on tax data constitute a lower bound, while the estimates based on our BILANZ data are upper bounds.
  • Publication
    A Safe Harbor: Wealth-Income Ratios in Switzerland over the 20th Century and the Role of Housing Prices
    ( 2020) ;
    Martinez, Isabel
    We estimate the ratio of private wealth to national income, βpt, for Switzerland over the period 1900–2018. Our results indicate that the development of βpt in Switzerland did not follow a U-shaped pattern as in most European countries, but that the evolution was extraordinarily stable, with βpt oscillating around 500% over most of the 20th century. How- ever, the wealth-income ratio has been on the rise since the turn of the century to reach 721% in 2017—an unprecedented level in the past. This considerable increase is mainly driven by large capital gains in housing wealth since 2010. We present new cross-country evidence that capital gains in housing wealth have become an important driver of rising wealth-income ratios in a series of developed economies.
  • Publication
    The Wealth-Income-Ratio in Switzerland, 1900-2017
    Following Piketty (2104), we estimate wealth-to-income ratios for Switzerland over the period 1900-2017. For the most recent period, we find that the national wealth-income ratio in Switzerland has been rising from 494% in 1995 to 747% in 2017. This impressive increase was caused by the strong increase of capital gains in housing wealth since 2010. In addition, we present new historic estimates of the evolution of the private wealth-income ratio between 1900 and 1995. Using new data sources, we find that earlier estimates by Brülhart et al. (2017) underestimated total private wealth prior to the year 2000. This results in a much less dramatic increase in total private wealth over the period 1980-2000, supporting earlier findings of a relatively stable evolution of wealth and income inequality in Switzerland over the past century.