A Page from the Book of Zug

Imagine a place called Zug where luxury shops abound, government pays its bills, and there are so many jobs that employers sometimes have a hard time finding people to fill them. Imaginary, you say?

Zug is not a figment of my imagination. Zug exists. And it is just as prosperous as you can imagine! The small Swiss canton boasts a history of low tax rates for individuals and multinational corporations. The highest personal income tax anyone in Zug pays is 22.9%, and companies pay an average of just 15.4%—rates lower than Switzerland’s average and far below top rates in the U.S.

Zug has been growing at rapid speed while the other economies of Europe and the United States stagnate. As the Wall Street Journal reports, “the number of jobs in Zug rose 20% in six years, driven by the economic boom and foreign companies’ efforts to minimize their taxes.” Unemployment in the United States remains at 9.2%. In the EU it’s 9.4%. In Zug it is 1.9%.

What about the housing market in Zug? Since the financial crisis in 2000, Zug’s housing prices have continued to rise 72% – building equity for residents and homeowners. The market is tight for those seeking to live in Zug – prices, not politics are primarily determining supply. With housing in high demand and with prices rising in response, market incentives encourage a steady supply response.

With all that economic growth, Zug must be an ugly place to live, right? Well, actually no. “Nearly 90% of the canton’s 92 square miles consist of forest, farmland and lakes. Much of the rest is packed with commodity traders, private-equity firms and divisions of big multinationals, occupying mostly low-rise, modern buildings.”

Oh, but all that economic growth must bring income inequality. True. “Zug has the widest wealth disparity in Switzerland” – but those who self-describe as “struggling” earn $350,000+ annually.

(For home buyers, the canton provides families earning less than about $100,000 annually 500 francs ($630) a month toward mortgage payments."

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