Supreme Court held cantonal tax rates breach Federal Constitution

On 1 June 2007, the Supreme Court of Switzerland released a far-reaching decision regarding cantonal income tax rates. The canton of Obwalden amended its income tax rates for individuals per 1 January 2006. For individuals, progressive tax rates usually apply, i.e. the effective tax rate increases with higher income. Progressive tax rates are based on the ability-to-pay principle. However, according to the tax legislation of the canton of Obwalden, a declining tax rate applies to…