20.1 Cold Progression: Switzerland

The problem of cold progression exists in Switzerland just like in Germany or Austria. It is inherent in all progressive tax systems if they are not indexed to inflation, i.e. if the tariff level limits do not increase according to the inflation ("tax tariff on rolls"). The following illustrations are analogous to the graphs for Germany.

The graph below shows the inflation rates of Germany, Austria, and Switzerland in comparison. (Source: national central banks)

The tax rates are constantly adjusted. In the next graph, the income tax rates in Zurich since 1999 can be displayed. We show the rates from Zurich to represent Switzerland, since income tax in Switzerland is composed of the direct federal tax and the simple state tax, the latter being determined by means of potentially annually changing assessment rates (Steuerfü sse). Due to the three independent components (direct federal tax, simple state tax and tax base) there are very frequent changes in rates, whenever one of the components has changed. The last change took place in 2014. The tax rates now listed are based on a fictitious person who is resident in the city of Zurich - and thus also in the canton of Zurich - and who belongs to the Roman Catholic Church. This denomination was chosen because it is the most common denomination according to the Statistical Yearbook of the City of Zurich. If the constellation is different, the Steuerfuß of the simple state tax must be adjusted.

In the graph, the marginal tax rate and the average tax rate are being displayed. Also, with the slider (red cross) the actual tax burden can be indicated for a selected income. It becomes obvious that the tax rate changes frequently and significantly.

Select the tax rate of the year:

1999 2000 2001 2002 2003 2006 2008 2010 2011 2012 2013 2014

(c) by Christian Bauer
Prof. Dr. Christian Bauer
Chair of monetary economics
Trier University
D-54296 Trier
Tel.: +49 (0)651/201-2743
E-mail: Bauer@uni-trier.de
URL: https://www.cbauer.de