4 ms·

> For me, it makes a lot more sense to tax realized profit, or better yet consumption, than wealth itself. Why not tax all of that simultaneously? That's what

> For me, it makes a lot more sense to tax realized profit, or better yet consumption, than wealth itself. Why not tax all of that simultaneously? That's what the Dutch do. > I don't think it is desirable to force realization just to increase tax revenue. And yet various governments are doing or are planning exactly that.

s1artibartfast 4y ago
I searched and couldnt find anything about a Dutch wealth tax, just answers saying they dont have one. Do you have a source? I wasn't aware of any western countries which have wealth taxes, but I was surprised to find that Norway, Spain, and Switzerland do have some. https://taxfoundation.org/net-wealth-tax-europe-2022/#:~:text=The%20concept%20of%20a%20net,Norway%2C%20Spain%2C%20and%20Switzerland https://taxfoundation.org/net-wealth-tax-europe-2022/#:~:tex....
- em500 4y ago
  Straight from the source: https://www.belastingdienst.nl/wps/wcm/connect/en/income-in-box-3/income-in-box-3 https://www.belastingdienst.nl/wps/wcm/connect/en/income-in-... Summary: https://en.wikipedia.org/wiki/Taxation_in_the_Netherlands#Box_3:_savings_and_investment https://en.wikipedia.org/wiki/Taxation_in_the_Netherlands#Bo...
  - s1artibartfast 4y ago
    This looks like capital gains to me. Taxation on income from wealth, not wealth itself. https://www.belastingdienst.nl/wps/wcm/connect/en/income-in-box-3/content/what-does-the-ruling-of-the-supreme-court-mean https://www.belastingdienst.nl/wps/wcm/connect/en/income-in-...
    - erwincoumans 4y ago
      No, they use hypothetical yield (of over 5%). It applies to savings accounts, that had negative interest rates... See my reply above.
      - s1artibartfast 4y ago
        Looking at your links, it says that savings are taxed at 0.01%. What am I missing here
        deleted 4y ago
        [deleted]
        erwincoumans 4y ago
        The 0.01% is temporary/new, due to the wealth tax declared illegal by the European Supreme Court. This link explains the situation around the "Box 3" wealth tax better: https://www.tilburguniversity.edu/magazine/supreme-court-netherlands-rules-box-3-wealth-tax https://www.tilburguniversity.edu/magazine/supreme-court-net... “In 2001, the legislature assumed that everyone could easily earn a 4% return on their assets in Box 3 – regardless of how they were invested – without taking any risk, but this has certainly not been the case since 2008. Savings rates have yielded much less interest, as have bonds, with interest rates as low as 0%. At the moment, we’re even seeing negative interest rates. But the legislature never adjusted that assumed 4% return. This resulted in a situation where, for many years, the wealth tax people paid far exceeded their actual income from wealth"
    - em500 4y ago
      It's not a capital gains tax. The Netherlands has been taxing net wealth (with some exemptions, most notably for primary residences and vehicles) at around around 1.2%/year. This was implemented as a 30% levy on an assumed 4% investment return on net wealth, regardless of actual or realized returns and regardless of how the wealth was held (stocks, bonds, savings account, bitcoins). I suppose you could say that the taxation is on "income from wealth" (assumed to be 4%, taxed at 30%), but that seems like a distinction without any difference to me. Your net wealth is assessed, and you pay a fix % on it, regardless how much money it actually made. The article you linked to refers to a recent court ruling against that system. (A bunched of pissed citizens sued the government because interest saving rates have been 0% or even negative for many years now.) The government is now scrambling to update the tax code, but AFAIK no change has been implemented yet. Last year's net wealth was still taxed at assumed (rather than realized) investment returns in this years income tax assesment.
      - s1artibartfast 4y ago
        You say it is a distinction without a difference, but it seems like it is very relevant to me. For one, the fictional assumed income is based on the type of asset. Second, it seems like the fictitious rate is calculated based on Market conditions and changes over time. Lastly, the entire premise of the tax is to be levied on income. The assumed rate is just a simplification to calculate that. It seems that the legal proceedings were decided in favor of the taxpayers specifically because of this.
        FooBarWidget 4y ago
        > For one, the fictional assumed income is based on the type of asset It isn't. Under the current systen they make bo distinction, they just look at total worth per the market value. They treat 200k in savings the same as 200k in stocks.
- erwincoumans 4y ago
  Yes, the Netherlands has wealth tax, also known as "Box 3", and it includes tax on hypothetical yield on your savings accounts. The government got into issues with the European Supreme Court for this: https://home.kpmg/us/en/home/insights/2022/05/tnf-netherlands-box-3-wealth-tax-and-plan-for-future-restoration-of-rights.html https://home.kpmg/us/en/home/insights/2022/05/tnf-netherland... "The box 3 tax rate is assessed against a hypothetical yield. You are not taxed for capital gains or actual rental income. Instead, the Dutch tax office assumes that you enjoy a yield of up to 5.69% over your total asset value, irrespective if any actual gains are higher or lower(!)." Note that actual savings interest rates were close to zero or even negative.

s1artibartfast 4y ago

I searched and couldnt find anything about a Dutch wealth tax, just answers saying they dont have one. Do you have a source? I wasn't aware of any western countries which have wealth taxes, but I was surprised to find that Norway, Spain, and Switzerland do have some. https://taxfoundation.org/net-wealth-tax-europe-2022/#:~:text=The%20concept%20of%20a%20net,Norway%2C%20Spain%2C%20and%20Switzerland https://taxfoundation.org/net-wealth-tax-europe-2022/#:~:tex....

em500 4y ago
Straight from the source: https://www.belastingdienst.nl/wps/wcm/connect/en/income-in-box-3/income-in-box-3 https://www.belastingdienst.nl/wps/wcm/connect/en/income-in-... Summary: https://en.wikipedia.org/wiki/Taxation_in_the_Netherlands#Box_3:_savings_and_investment https://en.wikipedia.org/wiki/Taxation_in_the_Netherlands#Bo...
- s1artibartfast 4y ago
  This looks like capital gains to me. Taxation on income from wealth, not wealth itself. https://www.belastingdienst.nl/wps/wcm/connect/en/income-in-box-3/content/what-does-the-ruling-of-the-supreme-court-mean https://www.belastingdienst.nl/wps/wcm/connect/en/income-in-...
  - erwincoumans 4y ago
    No, they use hypothetical yield (of over 5%). It applies to savings accounts, that had negative interest rates... See my reply above.
    - s1artibartfast 4y ago
      Looking at your links, it says that savings are taxed at 0.01%. What am I missing here
      - deleted 4y ago
        [deleted]
      - erwincoumans 4y ago
        The 0.01% is temporary/new, due to the wealth tax declared illegal by the European Supreme Court. This link explains the situation around the "Box 3" wealth tax better: https://www.tilburguniversity.edu/magazine/supreme-court-netherlands-rules-box-3-wealth-tax https://www.tilburguniversity.edu/magazine/supreme-court-net... “In 2001, the legislature assumed that everyone could easily earn a 4% return on their assets in Box 3 – regardless of how they were invested – without taking any risk, but this has certainly not been the case since 2008. Savings rates have yielded much less interest, as have bonds, with interest rates as low as 0%. At the moment, we’re even seeing negative interest rates. But the legislature never adjusted that assumed 4% return. This resulted in a situation where, for many years, the wealth tax people paid far exceeded their actual income from wealth"
  - em500 4y ago
    It's not a capital gains tax. The Netherlands has been taxing net wealth (with some exemptions, most notably for primary residences and vehicles) at around around 1.2%/year. This was implemented as a 30% levy on an assumed 4% investment return on net wealth, regardless of actual or realized returns and regardless of how the wealth was held (stocks, bonds, savings account, bitcoins). I suppose you could say that the taxation is on "income from wealth" (assumed to be 4%, taxed at 30%), but that seems like a distinction without any difference to me. Your net wealth is assessed, and you pay a fix % on it, regardless how much money it actually made. The article you linked to refers to a recent court ruling against that system. (A bunched of pissed citizens sued the government because interest saving rates have been 0% or even negative for many years now.) The government is now scrambling to update the tax code, but AFAIK no change has been implemented yet. Last year's net wealth was still taxed at assumed (rather than realized) investment returns in this years income tax assesment.
    - s1artibartfast 4y ago
      You say it is a distinction without a difference, but it seems like it is very relevant to me. For one, the fictional assumed income is based on the type of asset. Second, it seems like the fictitious rate is calculated based on Market conditions and changes over time. Lastly, the entire premise of the tax is to be levied on income. The assumed rate is just a simplification to calculate that. It seems that the legal proceedings were decided in favor of the taxpayers specifically because of this.
      - FooBarWidget 4y ago
        > For one, the fictional assumed income is based on the type of asset It isn't. Under the current systen they make bo distinction, they just look at total worth per the market value. They treat 200k in savings the same as 200k in stocks.
erwincoumans 4y ago
Yes, the Netherlands has wealth tax, also known as "Box 3", and it includes tax on hypothetical yield on your savings accounts. The government got into issues with the European Supreme Court for this: https://home.kpmg/us/en/home/insights/2022/05/tnf-netherlands-box-3-wealth-tax-and-plan-for-future-restoration-of-rights.html https://home.kpmg/us/en/home/insights/2022/05/tnf-netherland... "The box 3 tax rate is assessed against a hypothetical yield. You are not taxed for capital gains or actual rental income. Instead, the Dutch tax office assumes that you enjoy a yield of up to 5.69% over your total asset value, irrespective if any actual gains are higher or lower(!)." Note that actual savings interest rates were close to zero or even negative.