What is the main finding of the ETH study?

The research by ETH Zurich, presented by Isabel Martinez of KOF, shows that the Swiss system as a whole accounts for approximately 45% of gross income for almost all social groups. Paradoxically, only the richest 1% of the population pays a lower share. This happens because, although income tax is progressive, charges such as VAT and health insurance premiums weigh proportionally more heavily on low incomes, canceling out the effect of tax progressivity in total taxation.

Why do health insurance premiums affect inequality?

According to the study, health insurance premiums (LAMal) are per-capita charges independent of income. While social contributions on labor become more significant for middle-income groups, health insurance premiums and VAT represent a very heavy burden for lower-income groups. Although subsidies and supplementary benefits exist, they are not enough to offset the gap with the richest 1%, who benefit from a lighter overall tax burden relative to their total national income, including profits and dividends.

How does wealth affect the wealth gap?

The ETH study emphasizes that in Switzerland wealth is growing faster than incomes. However, this advantage primarily goes to those who already own assets: people who do not own a home, for example, do not benefit from rising property prices. Moreover, returns on wealth can fuel further income inequality. Martinez notes that investing in shares or in the third pillar has become easier, but the difficulty of understanding the market can discourage savers, creating uncertainty compared with simpler products such as mortgages.

ETH study: poor and rich pay the same taxes

Di Marco Ferrari · Published on 2 October 2026

View of Bellinzona representing Swiss federal and cantonal institutions.

Research by ETH Zurich reveals that almost everyone pays 45% of their income. Only the richest 1% pay less due to health premiums and VAT.

Context

In brief

The overall system amounts to approximately 45% of gross income.
Only the richest 1% pays a lower share.
Health insurance premiums and VAT weigh more heavily on lower incomes.
The ETH method includes taxes, transfers and government benefits.

Key facts

Study → Swiss Federal Institute of Technology Zurich (ETH)
Researcher → Isabel Martinez, ETH KOF Institute
Overall share → approximately 45% of gross income
Bracket paying the least → richest 1%
Burdens mentioned → health insurance premiums and VAT
Method → overall national income, taxes, transfers and government benefits
Wealth → grows faster than incomes
Investments → stocks, including in the third pillar

Approximately 45% is the share of gross income that, according to the ETH study, is paid by all social groups. Only the richest 1% pays less. The research was presented by Isabel Martinez, a researcher at ETH Zurich's KOF Institute, in an interview published by Beobachter in its current issue. The news was reported by Keystone-ATS.

The point of the research is the gap between the progressivity envisaged for some taxes and the outcome of overall taxation. Income tax and, in part, wealth tax are structured progressively: those who earn more pay more. But, according to Martinez, health insurance premiums and VAT are left out of this initial view, independent of income and a heavier burden on lower-income groups. In the middle-income bracket, by contrast, employment income and the social contributions levied on it carry more weight. The issue of cassa malati premiums is therefore central to the explanation.

«All social groups pay approximately 45% of their gross income: only the richest 1% pays less».

Why the picture is broader

When asked whether, despite the Federal Constitution, taxation is not based on ability to pay, the economist replies that this conclusion can be reached by looking at taxes and contributions together. The study did not consider only taxable income and wealth. It used total national income from the national accounts and included taxes, transfers and government benefits, calculating who receives what share before and after these levies and interventions.

The calculation includes supplementary benefits, pensions and health-insurance subsidies, but also undistributed corporate profits and tax-advantaged dividends intended for majority shareholders. For Martinez, including all these incomes makes the picture more precise and more unequal.

Finally, the study links growing inequality to wealth. In Switzerland, wealth grows faster than incomes, but the advantage goes to those who own wealth: those who do not own a home do not automatically benefit from rising property prices. Returns on wealth can then fuel further income inequality.

Martinez also urges caution regarding stocks. Investing savings, for example in the third pillar, has become easier, but understanding the market and choosing the right product is more difficult than comparing mortgages. This difficulty, she concludes, can create uncertainty and discourage.

Operational details

How to read the levy in the balance sheet

The ETH figure is not equivalent to the rate indicated on an individual return. It measures the share of national income that remains after the set of taxes, contributions and benefits, or that which is redistributed through state interventions. For a resident, the practical check must keep the levels of Swiss tax separate: direct federal tax, cantonal tax and municipal tax. Each canton has its own law and multiplier; the municipality applies its multiplier to the cantonal tax. The comparison between two budgets can therefore also change depending on the tax location.

Entries not to be confused

The table helps to reconstruct the transition from gross income to the overall burden:

Voice
Voice	How it enters the reading	What to check
Income and wealth taxes	They are structured progressively	Portion paid in relation to income
VAT	It is independent of income and is mainly levied on low incomes	Weight on expenditure
KVG/KVG	Premiums are per capita, not a tax or a wage contribution	Cantonal premium and reduction
Social contributions	Are levied on income from employment in the middle range	Deductions from wages
State benefits	Includes pensions, supplementary benefits and health insurance benefits	Amounts received

This distinction avoids confusing the progressivity of the tax with the cost of living. KVG/KVG premiums vary by canton and region, and the premium reduction is cantonal; for residents, insurance is compulsory. The source points to premiums as one of the reasons why the overall burden weighs relatively more heavily on low incomes, alongside VAT and social security contributions.

For those who work on a salary, the transition from gross to net also includes pension contributions such as AHV/AHV and BVP/BVG, while pension benefits enter the considered transfer side. For those who do not own real estate, the comparison changes again: rising property prices do not produce an automatic profit, while assets generate returns.

The useful comparison

The practical question is not only what tax is paid, but what items remain after deductions and what benefits are received. A balance sheet that records taxes, VAT, premiums, contributions and transfers offers a reading closer to the ETH method. To learn more about the territorial effect on costo della vita in Svizzera, it is advisable to keep the tax and health items separate.

Useful planning tools

To estimate your pension strategy, use the pension planner and the pillar 3 simulator.

Key points

How to do a personal verification

The source does not propose a simulation for the individual taxpayer, but its method suggests a concrete sequence. The goal is not to look for a single rate: it is necessary to reconstruct gross income, separate withdrawals and benefits and distinguish assets from their returns. It is a broader reading than one based only on income or taxable assets.

Four operational steps

1. Start with gross. Write down your earned income and any property income. Separate the pre-tax portion from the after-tax portion. If there are retained earnings or subsidized dividends, the research will look at them in the big picture.

2. Separate the tax authorities. Put direct federal tax, cantonal tax and municipal tax in different columns. The canton applies its own law and multiplier; the municipality uses the multiplier on the cantonal one. This avoids comparisons based on a single item.

3. Isolate health and consumption. Record the KVG/KVG premiums separately from VAT. For those residing in Switzerland, the KVG is mandatory and must be taken out within 3 months of arrival; the premiums are per person and depend on the canton and region. Also check the cantonal premium reduction, without treating it as a complete cancellation of the disparity described by the source.

4. Look at your assets. If you don't own real estate, don't automatically attribute rising house prices to you. If you evaluate stocks or the role of retirement provision, you can delve into AVS/LPP/rendita; don't turn the article into investment advice. Martinez warns that understanding the market and choosing the right product is more difficult than comparing mortgages. The third pillar is cited by the source as a possible area for investing savings, but caution remains necessary.

The final audit must put gross, taxes, VAT, premiums, contributions, benefits and assets side by side. This is how the comparison sticks to the method described and does not exchange a single deduction for the entire cost of living. To translate this data into a personal estimate, use the calcolatore stipendio.

Source: swissinfo.ch

Frequently Asked Questions

What is the main finding of the ETH study?: The research by ETH Zurich, presented by Isabel Martinez of KOF, shows that the Swiss system as a whole accounts for approximately 45% of gross income for almost all social groups. Paradoxically, only the richest 1% of the population pays a lower share. This happens because, although income tax is progressive, charges such as VAT and health insurance premiums weigh proportionally more heavily on low incomes, canceling out the effect of tax progressivity in total taxation.
Why do health insurance premiums affect inequality?: According to the study, health insurance premiums (LAMal) are per-capita charges independent of income. While social contributions on labor become more significant for middle-income groups, health insurance premiums and VAT represent a very heavy burden for lower-income groups. Although subsidies and supplementary benefits exist, they are not enough to offset the gap with the richest 1%, who benefit from a lighter overall tax burden relative to their total national income, including profits and dividends.
How does wealth affect the wealth gap?: The ETH study emphasizes that in Switzerland wealth is growing faster than incomes. However, this advantage primarily goes to those who already own assets: people who do not own a home, for example, do not benefit from rising property prices. Moreover, returns on wealth can fuel further income inequality. Martinez notes that investing in shares or in the third pillar has become easier, but the difficulty of understanding the market can discourage savers, creating uncertainty compared with simpler products such as mortgages.