Weaker economy, rising private wealth. As the?
In 2020, real gross domestic product fell by 6.4 percent in 16 of the 27 EU member states. While the middle class continues to thin out, the number of millionaires is increasing significantly. In the same period, private wealth increased by 3.9 percent to a peak of 69 trillion euros. Germany, France, Great Britain and Italy took the top spots in the EU ranking for private wealth in 2020, however, most millionaires live in Switzerland.
Is capitalism still sustainable in this form?
One of the reasons why the number of private assets is increasing despite declining economic output may be that box seats on the income and wealth pyramid are increasingly being occupied by heirs. In this way, assets can be accumulated and increased without having to pay, the basis for which the testators have created through their work.
Capitalism’s simple message, that talent and effort create wealth, becomes implausible in the face of these developments. Jobs with a good income are still available and are the basis of the middle class. But it is precisely the middle class, the mainstay of democratic capitalism, that is exposed to increasing pressure to perform. In many cases, this space has to be bought at a high price due to restrictions, especially in the private sector.
Not every millionaire in Switzerland is also a Swiss citizen
When it comes to the number of millionaires in relation to the number of inhabitants, Switzerland is the front runner. In the state of the Confederates, 14.1 percent of the slightly more than eight and a half million inhabitants are millionaires. This is also confirmed every year by the Global Wealth Report.
According to a report by the Handelszeitung from November 2020, one in six of the 300 richest has German roots and that’s a total of 49. The reasons given are, on the one hand, the lower tax risk and, on the other hand, the corona pandemic, which has triggered a run on luxury real estate. But other causes such as security, banks and discretion also play a role.
Tax hurdles and social responsibility. A solution?
The Confederation of German Trade Unions (DGB) wants to counteract this development by levying a new wealth tax or introducing a fair inheritance tax. Company heirs should no longer be better off in tax terms, and an additional five to seven billion euros would be flushed into the coffers of the public budget. Seen in this way, the demand of the trade union federation is quite legitimate if this additional income is used at the same time for tax relief for the middle class and lower incomes.
However, these tax measures will only be successful if the numerous tax loopholes for the rich are closed at the same time. Otherwise, millionaires will continue to migrate to Switzerland or to places where their wealth remains relatively untouched by the state.
Neither tax hurdles nor high-profile charity events with flashbulbs will prevent this development as long as the heirs and the super-rich lack basic social responsibility.
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Study: Highest density of millionaires in Switzerland