Switzerland is unique in its approach to taxation and could provide a positive benchmark for countries brave enough to create healthy tax competition across jurisdictions. Each canton and municipality sets its own rate, resulting in large differences for private households and corporations.
Despite the disparities, this competition gives Swiss society a progressive choice base. Financially strong cantons such as Zug, Basel, Geneva and Zurich support the weaker cantons such as Aargau, Jura, Valais and Bern. Fiscal equalization mechanisms – including the resource equalization, the cohesion fund of CHF 280 million and the federal cost compensation of CHF 724 million – help to bridge the gap in anomalies.