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The Dutch have a wealth tax too. Actually, it is treated as an income tax: they say that all wealth will produces a typical “fictitious” gain of x% (I think 6%)

The Dutch have a wealth tax too. Actually, it is treated as an income tax: they say that all wealth will produces a typical “fictitious” gain of x% (I think 6%). So, they tax the fictitious gains at 30%. So, that leads to a 2% overall wealth tax. So, if you have $1m in assets, they assume this money makes 6% a year (60k). On the fictitious gains of 60k, they then charge 30% tax (20k). I haven’t checked the specific numbers above, but that’s the gist of it. It seems fair on principle, though I haven’t thought about it too much. Would that be a possibility in the states?

tetromino_ 3y ago
How does this fictitious gain tax interact with the non-fictitious capital gains tax? In other words, if I were a rich man, and invested my assets gaining 5% as opposed to keeping them in a Scrooge McDuck vault, would I be taxed at 30% of fictitious 6% + 30% of real 5% i.e. effectively at 66% of my capital gains, or only at the "fictitious" income, or only at the real capital gains?
- j4yav 3y ago
  There’s no real capital gains. You’d always be taxed the fictitious amount, whether or not you made more or less, or even lost money. But they are planning to change it because it was unfair to people who just put their wealth in their checking account and were being taxed as if they invested it.
- Pepe1vo 3y ago
  No, your actual gain in capital would not be taxed. The only thing that is being taxed is the "fictitious" gain on the monetary value of your capital at a certain date (peildatum). Everyone agrees that this system is dumb as shit, but our tax department is too incompetent to implement a sane capital gain tax like they have in, for example. Australia.
lifestyleguru 3y ago
> wealth will produces a typical “fictitious” gain of x% (I think 6%). So, they tax the fictitious gains at 30%. So, that leads to a 2% overall wealth tax. I simply don't believe rich Dutch are paying this tax on their price bloated real estate in Netherlands, Spain, Dubai, Caribbean Islands and wherever. This would be enourmous fortunes in annual wealth tax.
_heimdall 3y ago
While living in the Netherlands I never considered the wealth tax fair. The government is making an assumption that I am going to invest my money and that I invest it well enough to get an average return. Not everyone will went to invest their wealth in risky assets though, and not everyone who does invest it will do well. Their justification for the tax rate is only that, a justification. In reality the wealth tax isn't directly tied to investment returns and serves only to disincentivize saving your wealth. It pushes people to invest their wealth in risky assets, meaning they effectively want all individuals to hold a pile of IOUs rather than actual wealth accrued over their lifetime. The same can be said for a target inflation rate of 2-3%. Adding a wealth tax on top just turns the screws a bit more, more strongly pushing individuals to put most wealth they accrue right back into the slot machine.

tetromino_ 3y ago

How does this fictitious gain tax interact with the non-fictitious capital gains tax? In other words, if I were a rich man, and invested my assets gaining 5% as opposed to keeping them in a Scrooge McDuck vault, would I be taxed at 30% of fictitious 6% + 30% of real 5% i.e. effectively at 66% of my capital gains, or only at the "fictitious" income, or only at the real capital gains?

j4yav 3y ago
There’s no real capital gains. You’d always be taxed the fictitious amount, whether or not you made more or less, or even lost money. But they are planning to change it because it was unfair to people who just put their wealth in their checking account and were being taxed as if they invested it.
Pepe1vo 3y ago
No, your actual gain in capital would not be taxed. The only thing that is being taxed is the "fictitious" gain on the monetary value of your capital at a certain date (peildatum). Everyone agrees that this system is dumb as shit, but our tax department is too incompetent to implement a sane capital gain tax like they have in, for example. Australia.

lifestyleguru 3y ago

> wealth will produces a typical “fictitious” gain of x% (I think 6%). So, they tax the fictitious gains at 30%. So, that leads to a 2% overall wealth tax. I simply don't believe rich Dutch are paying this tax on their price bloated real estate in Netherlands, Spain, Dubai, Caribbean Islands and wherever. This would be enourmous fortunes in annual wealth tax.

_heimdall 3y ago

While living in the Netherlands I never considered the wealth tax fair. The government is making an assumption that I am going to invest my money and that I invest it well enough to get an average return. Not everyone will went to invest their wealth in risky assets though, and not everyone who does invest it will do well. Their justification for the tax rate is only that, a justification. In reality the wealth tax isn't directly tied to investment returns and serves only to disincentivize saving your wealth. It pushes people to invest their wealth in risky assets, meaning they effectively want all individuals to hold a pile of IOUs rather than actual wealth accrued over their lifetime. The same can be said for a target inflation rate of 2-3%. Adding a wealth tax on top just turns the screws a bit more, more strongly pushing individuals to put most wealth they accrue right back into the slot machine.