The article I read was Swiss tax system needs reform says OECD. This article talked about the many problems the Swiss economy and how they are trying to repair and boost the Swiss economy. This is a problem which has recently affected the United States and is still continuing to affect the United States with the Unites States trillions of dollars in debt and just recovering from a recession this is a way the United States relates to the Swiss. The first thing that the Swiss wanted to change in this article is the high income tax return of which is making people have to pay less tax on house hold income which is where most taxes from the Swiss come from instead of like how it is in the Unite States which is from sales. The Swiss had a thought of some method would not only improve the economy but prevent future down turn of their economy. The first of which is that they want to rebalance the Swiss tax system and do so by increasing the taxes on consumer goods but at the same time lower the personal tax rate. The second thing mentioned is that the Franc was currently very strong that is bad because it means trading to France would result in a loss of money. The reason considered to have caused this loss of value was the slowing of trade to Germany which is a stronger partner for the Swiss to trade to. With trading sped back up to Germany the economy should return to normal. The third thing mentioned was how the banks remained the same and stagnant. This was due to the amount of leverage not being changed. Overall I feel that this is an all too familiar situation. When I read this it took me back to a few years ago when the United States was in the middle of the recession. Even now the United States is still very deep in debt but there are signs of recovery this will be an interesting story to follow to see if the Swiss can pull themselves out of this.
I agree that tax systems are a universal source of conflict within many countries' economies. Remember, though that Switzerland has a much higher percentage of income to pay (for social services) as well as a high value added tax and sales tax.
ReplyDeleteNormally a strong currency is a good thing, but this article shows what can happen if a currency is too strong in comparison to its neighbors. Switzerland is surrounded by countries in the European Monetary Union, which puts them in a unique position.
This was the first article I read for the analysis. At first I couldn't really make much sense of it, because I'm a macroeconomics dummy, but after reading your analysis the article makes more sense and does give a better insight to the Swiss tax system. I too wondered why the Swiss were worried about the Franc being too strong, because I always thought that the name of the game was to have the strongest currency.
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