An alliance of SVP and Linker has prevented the canton of Zurich from adjusting its taxes to social realities.
When it comes to inheritance, the state hollows its hands.
Not only condolences, but also bills end up in the mailbox when a person dies. Perhaps the biggest comes from the tax office: in the canton of Zurich, heirs have to dig deep into their pockets, depending on their degree of relationship and wealth. In 2020 alone, the canton received around CHF 280 million from inheritance and gift taxes.
Unmarried life partners are particularly hard hit. In contrast to married couples and registered partners, who can receive the entire inheritance without deduction, cohabiting partners only receive 50,000 francs tax-free. Depending on the amount of the inheritance, up to 36 percent of the remaining amount goes to the canton.
The stepchildren do not fare much better: they have an exemption of only 15,000 francs, but their tax rate is a maximum of 12 percent. The biological descendants, on the other hand, pay nothing, no matter how much they inherit.
Stepchildren have to pay taxes
Balz Hösly finds it shocking that there are such differences when it comes to inheritance. Hösly is a specialist lawyer for inheritance law from Zurich, and from 1991 to 2003 he also sat on the cantonal council for the FDP. Now he has made representations to the Zurich Parliament with an individual initiative that any citizen can submit.
Hösly has applied for the exemption limits to be raised – to CHF 500,000 for life partners and CHF 250,000 for the stepchild or the partner’s child. In addition, these beneficiaries – and also the grandparents – should have to pay a maximum of 6 percent of the remaining amount as tax to the canton.
“The greatest need of my clients is that all descendants are treated economically as equally as possible,” said Hösly on Monday on the sidelines of the deliberations in the cantonal council. But this is not possible with today’s inheritance tax law. In blended families, for example, where both partners bring their own children into the relationship, this is hardly possible.
“If a spouse dies and each child inherits the same amount, their own children receive their inheritance tax-free. But the stepchildren can only deduct 15,000 francs from all amounts and have to pay taxes on the rest.”
Another case with a comparable injustice is when someone falls in love again at the age of 60 or 70 and enters into an old-age relationship with their partner. “It’s quite possible that the two will be there for each other for another twenty years and also want to secure each other financially without getting married right away,” said Hösly.
“But today’s law only grants you an exemption of 50,000 francs after the death of your partner, and you pay up to 36 percent tax on the rest of your inheritance, as if you were a stranger.”
Inheritance law is currently being revised at the federal level, said Hösly on Monday in the cantonal council. Among other things, the compulsory portions would be reduced, and freedom in the distribution of inheritance would increase. This must also be reflected in the cantonal laws.
“dollar sign in eyes”
However, the majority of the Zurich parliament did not follow his reasoning. The SP, for example, is in favor of taxation that is independent of marital status, said Stefan Feldmann (Uster). But increasing the exemption limits is a step in the wrong direction.
Melanie Berner (AL, Zurich) didn’t even bother to see anything positive about Hösly’s suggestion. The adjustment of the inheritance tax to changed social conditions is a very transparent pretext. “It’s a bourgeois salami tactic to saber cut by cut on taxes.” It was an application “in the service of the right-wing bourgeois financial elite,” Hösly had dollar signs in his eyes.
Hösly, on the other hand, was supported by his liberal party colleagues. “We see this as an absolutely liberal approach,” said Martin Farner (FDP, Stammheim). “The adjustments correspond to today’s social and family environment.” The GLP also found the proposal worth examining.
But the bourgeois bloc did not agree. The SVP, which generally welcomes lower taxes, could not do much with Hösly’s application, also for political and tactical reasons, as Marcel Suter (Thalwil) emphasized. He feared that a discussion about inheritance taxes could even lead to tightening in the end. “In the end we have an inheritance tax for everyone again, so we’ve given ourselves a great gift!”
At least 60 votes would have been needed to advance the individual initiative one round. She clearly missed this quorum: only 45 cantonal councilors backed the project.
Hösly does not believe that the issue in the canton of Zurich is over. “Various cantons have already made further progress and have reduced or completely abolished inheritance and gift taxes for long-term partners and stepchildren. The federal government is also putting pressure on.”
Sooner or later Zurich will not be able to avoid taking action as well. “The cantonal council,” said Hösly, “missed an opportunity to take charge.”