Wealth inequality in Switzerland: Who earns and who owns?
Although Switzerland is a relatively egalitarian country in comparison to other nations, there are clear differences between the “haves” and the “have-nots”. Much of the country’s wealth is located in just a few Swiss cantons and many politicians are calling for the country to become more equal.
Much of Switzerland’s wealth is concentrated in Zug
Unsurprisingly, many of Switzerland's most wealthy residents head to Canton Zug and Canton Schwyz, as these areas have significantly lower levels of income tax compared with elsewhere in the country, and there are many international companies offering high salaries in these regions. By some estimates, the richest 10 percent in Canton Zug earn almost half of all income in the canton, and provide 88 percent of the canton’s tax revenue, despite the lower tax rate.
While the region does attract workers through low tax rates, top earners are then often subjected to higher federal taxes. Switzerland also has a national system of financial adjustment payments to balance out cantonal finances, where the most well-off areas make contributions to cantons which are still developing. Zug and Schwyz are top contributors to this system.
Wealth inequality is more dramatic than income inequality
While income inequality is often effectively managed by the combination of taxes and reimbursements, wealth inequality is often more difficult to tackle. In Switzerland, the top 10 percent of earners take home approximately one-third of the country’s total earnings. For wealth, the difference is greater still, with the wealthiest 10 percent of the Swiss population owning 63 percent of the country’s capital.
One of the things that works against the country is the limited opportunity for many ordinary people to buy a house in Switzerland, as most people spend their lives renting. It is often difficult for people to put down the required capital to be granted a mortgage. A lot of wealth in the country is held by “legacy” families, who build a portfolio of assets and wealth to eventually pass on to their children and generations to come.
Compared to other countries, Switzerland’s income gap remains stable
Despite Switzerland having higher wealth inequality than Europe’s average, the country’s income inequality has actually remained stable. In recent years, other nations have seen the gap between their highest and lowest-income earners widen, while for Switzerland, this gap has remained relatively stable.
The average salary in Switzerland in 2022 is around 6.507 Swiss francs per month. Depending on which city or canton a person is living in, there will also be large differences in income tax. According to Melanie Häner, director of the social policy unit of the IWP research institute, these differences in regional tax levels do not harm efforts to achieve income equality, because the effects of stronger federal taxes counterbalance the low tax rates of cantons like Zug and Schwyz.
Richest 10 percent pay about 51 percent of all income tax in Switzerland
The richest 10 percent of earners in Switzerland contribute around 51 percent of the nation's tax revenue. This helps to level the playing field in terms of income inequality, but wealth inequality still remains largely unchecked.
Though there are some measures in place to balance wealth in Switzerland such as an inheritance tax, the lack of significant taxation on profits arising from sales of shares and the high amount of wealth held by legacy families keeps Switzerland’s wealth inequality at one of the highest rates in western Europe - only Ireland has a higher rate.