Growing gap between rich and poor
Jun 2025
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Oec. Magazin
In Switzerland, the richest 1% own almost half of the country's wealth – partly due to cantonal differences in wealth taxation. This is shown in a new study by UBS Foundation Professor Florian Scheuer.
This article by Solenn Le Goff was originally published in German in Oec. Magazin June 2025. Translated and edited for layout purposes by the UBS Center.
The wealth tax has a long tradition in Switzerland and affects most taxpayers. However, it varies greatly from canton to canton. Has this peculiarity contributed to growing inequality? Florian Scheuer, UBS Foundation Professor of Economics of Institutions, investigated this question together with his co-authors Isabel Martinez and Samira Marti. His key finding: as many cantons have reduced their top wealth tax rates over the last decades, inequality in Switzerland has increased. Using data on the wealth distribution in all 26 Swiss cantons from 1969 to 2018, he and his collaborators examined the long-term relationship between wealth taxes and wealth concentration. The result: while top tax rates fell significantly in almost all cantons, wealth inequality increased, in some cases dramatically. The canton of Nidwalden, which has the lowest wealth tax in Switzerland, is particularly striking. There, the top 1% of the population holds around 70% of the total wealth—an extreme figure by national standards.
Tax policy influences inequality
However, the wealth tax is not the only reason for this development. For example, reforms to the estate tax since the 1990s have made it possible to pass on wealth to direct descendants largely tax-free. According to Scheuer, this is also likely to have contributed to increasing inequality – with as yet unknown long-term effects. His research shows that tax policy is an important lever for affecting the wealth distribution. How Switzerland will deal with this in the future remains a key political question.
In Switzerland, the richest 1% own almost half of the country's wealth – partly due to cantonal differences in wealth taxation. This is shown in a new study by UBS Foundation Professor Florian Scheuer.
This article by Solenn Le Goff was originally published in German in Oec. Magazin June 2025. Translated and edited for layout purposes by the UBS Center.
The wealth tax has a long tradition in Switzerland and affects most taxpayers. However, it varies greatly from canton to canton. Has this peculiarity contributed to growing inequality? Florian Scheuer, UBS Foundation Professor of Economics of Institutions, investigated this question together with his co-authors Isabel Martinez and Samira Marti. His key finding: as many cantons have reduced their top wealth tax rates over the last decades, inequality in Switzerland has increased. Using data on the wealth distribution in all 26 Swiss cantons from 1969 to 2018, he and his collaborators examined the long-term relationship between wealth taxes and wealth concentration. The result: while top tax rates fell significantly in almost all cantons, wealth inequality increased, in some cases dramatically. The canton of Nidwalden, which has the lowest wealth tax in Switzerland, is particularly striking. There, the top 1% of the population holds around 70% of the total wealth—an extreme figure by national standards.
Switzerland is one of the few countries in the world that still levies a wealth tax. Image: Yannick Pulver / Unsplash
Florian Scheuer on Google Scholarbrowse
Quote
While top tax rates fell significantly in many cantons, wealth inequality increased drastically in some cases.
Florian Scheuer
Contact
Martínez is an Economist working on topics around the distribution of income and wealth, how we tax these things, and how people’s behavior responds to taxes. Since April 2020, she has been holding a research position at KOF Institute at ETH Zurich. During the Fall term 2021/22, she was Distinguished Visiting Scholar at the City University of New York (CUNY). She is a CEPR Research Affiliate, a Fellow of the World Inequality Database Project (WID.world) and of the SIAW Institute at the University of St.Gallen, where she completed her PhD in 2016. From fall 2017 until spring 2020 she worked as an economist for the Swiss Federation of Trade Unions SGB-USS. Since 2018, Martínez represents the trade unions in the Swiss Competition Commission as an elected Member of the Commission.
Economist, Swiss National Councillor (SP)
Samira Marti
Samira Marti ist eine Ökonomin, die seit 2018 im Nationalrat für die Sozialdemokratische Partei sitzt. Sie ist Co-Präsidentin der SP Schweiz.
UBS Foundation Professor of Economics of Institutions
Florian Scheuer received his PhD from MIT in 2010. He is interested in the policy implications of rising inequality, with a focus on tax policy. In particular, he has worked on incorporating important features of real-world labor markets into the design of optimal income and wealth taxes. These include economies with rent-seeking, superstar effects or an important entrepreneurial sector, frictional financial markets, as well as political constraints on tax policy and the resulting inequality. His work has been published in the American Economic Review, the Journal of Political Economy, the Quarterly Journal of Economics and the Review of Economic Studies, among other journals. In 2017, he received an ERC starting grant for his research on “Inequality - Public Policy and Political Economy.” Before joining Zurich, he was on the faculty at Stanford, held visiting positions at Harvard and UC Berkeley and was a National Fellow at the Hoover Institution. He is Co-Editor of Theoretical Economics and Member of the Board of Editors of the Review of Economic Studies. He is also a Co-Director of the working group on Macro Public Finance at the NBER. He has commented on tax policy in various US and Swiss media outlets.
Martínez is an Economist working on topics around the distribution of income and wealth, how we tax these things, and how people’s behavior responds to taxes. Since April 2020, she has been holding a research position at KOF Institute at ETH Zurich. During the Fall term 2021/22, she was Distinguished Visiting Scholar at the City University of New York (CUNY). She is a CEPR Research Affiliate, a Fellow of the World Inequality Database Project (WID.world) and of the SIAW Institute at the University of St.Gallen, where she completed her PhD in 2016. From fall 2017 until spring 2020 she worked as an economist for the Swiss Federation of Trade Unions SGB-USS. Since 2018, Martínez represents the trade unions in the Swiss Competition Commission as an elected Member of the Commission.
Economist, Swiss National Councillor (SP)
Samira Marti
Samira Marti ist eine Ökonomin, die seit 2018 im Nationalrat für die Sozialdemokratische Partei sitzt. Sie ist Co-Präsidentin der SP Schweiz.
UBS Foundation Professor of Economics of Institutions
Florian Scheuer received his PhD from MIT in 2010. He is interested in the policy implications of rising inequality, with a focus on tax policy. In particular, he has worked on incorporating important features of real-world labor markets into the design of optimal income and wealth taxes. These include economies with rent-seeking, superstar effects or an important entrepreneurial sector, frictional financial markets, as well as political constraints on tax policy and the resulting inequality. His work has been published in the American Economic Review, the Journal of Political Economy, the Quarterly Journal of Economics and the Review of Economic Studies, among other journals. In 2017, he received an ERC starting grant for his research on “Inequality - Public Policy and Political Economy.” Before joining Zurich, he was on the faculty at Stanford, held visiting positions at Harvard and UC Berkeley and was a National Fellow at the Hoover Institution. He is Co-Editor of Theoretical Economics and Member of the Board of Editors of the Review of Economic Studies. He is also a Co-Director of the working group on Macro Public Finance at the NBER. He has commented on tax policy in various US and Swiss media outlets.