A Pay Diktat by the State is Damaging for All - Prof. Dr. Rudolf Minsch
ESPRIT St. Gallen Business Review
its recommendation on the vote). Hence, it is only logical to expect tax losses and social security revenue should the state now intervene with a diktat on high salaries. Various studies have tried to quantify these effects. In one of these studies, the University of St. Gallen elaborated numerous scenarios. They took account of pay ceilings set at various levels and the possible reactions of companies should the 1:12 initiative be adopted. Depending on the scenario, the study by Professor Christian Keuschnigg quantifies the loss in direct federal tax revenue up to 1.5 billion Swiss francs. There would be further losses in cantons and local municipalities. With regards to social security contributions, the deficit could be as high as 2.5 billion Swiss francs.
The 1:12 initiative directly affects the middle class as well as small and medium-sized companies. One could argue for hours about scenarios and assumptions that have been done. However, in view of the above facts, no-one can seriously doubt that tax and social security revenue would decline should the 1:12
initiative be adopted on 24 November. This would cause severe restrictions on redistribution of resources through the tax system – exactly what the Left has always been That is why the 1:12 initiative directly affects the middle class as well as small and medium-sized companies. If there is a Yes vote on 24th November, it is their taxes and social security contributions which would rise.
initiative. Besides higher taxes and AHV contributions, they are mainly fearing increasing bureaucracy. They know, the story does not end with just an abstract article in the Constitution. How 1:12 be implemented precisely, still needs to be worked out. But one thing is clear: Should the state be dictating pay, it would also have to monitor it. Since the initiative not only affects salaries but also all initiative themselves have recently determined that the 1:12 pay ratio would be based on hourly rate. One can only imagine the bureaucratic effort and cost entailed if all senior managers had to record their working hours in detail. And, incidentally, one could also ask: would the state have to check whether the hours claimed have actually been worked?
Germany 5,4 % 87,9 % 41 513 $
France 10,2 % 113,5 % 41 141 $
Spain 25% 97,8 % 29 289 $
38 - Winter 2013
Switzerland unemployment rate
2,9 %
Debt (% of GDP) GDP per capita
43,1 % 79 033 $
Italy 10,6% 143,6% 33 115 $
Greece 24,2 % 183,7 % 22 055 $