Position on the Juso Tax Initiative (99% initiative)

Dear Startup Community,

On Sunday, September 26, a popular initiative will be voted on, which, if accepted, will also have far-reaching consequences for Switzerland as a location for startups and innovation. The so-called 99% initiative wants to tax capital income at 150% and thus redistribute wealth to less wealthy individuals.

Free of party politics, we would like to show you why we believe the initiative must be rejected. We thereby focus on the elements that would particularly affect young companies and their founders:

• Growth is inhibited

For prosperity and success, risks have to be taken. Today, startups often bear this risk – i.e., highly innovative and scalable business models – which are usually developed over many years to later create high-skill jobs as SMEs. Three pillars, in particular, enable the growth of a startup: founders, employees, and investors. However, higher taxation of founders, employees, and investors reduces investments and thus inhibits the growth potential of startups.

• High taxation at exit

Founding a startup means much work and a meagre salary for years. Failure is possible, and no one will give the founders money back if they fail (which everyone probably thinks is fair). But if they are successful and sell the company, they get money for the invested work, courage, and capital. If this amount is massively taxed because of the 99% initiative, another incentive is lost. Not only the motivation disappears, but also the jobs because startups are the employers of tomorrow. 

• Lack of investors and unattractive employee participation

The same problem arises for investors (companies, VCs, or private investors) and employees if the 99% initiative is accepted: they entrust the startup with their often previously taxed capital or part of their salary in favour of a share in the company in which they believe.

If the profit from the sale of a successful startup is massively taxed, neither an investment nor employee participation in a startup is worthwhile (respectively, the conditions are massively worsened for everyone).

We, therefore, ask you to consider the above arguments in your vote and would be pleased if you inform your circle accordingly and forward or post this mailing.

Of course, we are also available for questions. You can also find further information at https://nein-zu-99prozent.ch.

SWESA
Swiss Startup Association