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Fundamental Tax Reform in The Netherlands
| Content Provider | EconStor |
|---|---|
| Author | Cnossen, Sijbren Bovenberg, Lans |
| Abstract | The Dutch Parliament has passed legislation for a new income tax that abolishes the current tax on personal capital income and substitutes it by a presumptive capital income tax, which is in fact a net wealth tax. This paper contrasts this wealth tax with a conventional realization-based capital gains tax, a retrospective capital gains tax which attempts to charge interest on the deferred tax, and a capital accretion tax which taxes capital gains as they accrue. None of the approaches meets all criteria for a 'good' income tax, i.e., equity, efficiency, and administrative feasibility. We thus conclude that the effective and neutral taxation of capital income can best be ensured through a combination of (a) a capital accretion tax to capture the returns on easy-to-value financial products, (b) a capital gains tax with interest to tax the returns on hard-to-value real estate and small businesses, and (c) a broad presumptive capital income tax, i.e., a net wealth tax, to account for the utility of holding wealth. We favor uniform and moderate proportional tax rates in the context of a dual income tax under which capital income is taxed separately from labor income. |
| File Format | |
| Language | English |
| Publisher | Center for Economic Studies and Ifo Institute (CESifo) |
| Publisher Date | 2000-01-01 |
| Publisher Place | Munich |
| Access Restriction | Open |
| Rights Holder | http://www.econstor.eu/dspace/Nutzungsbedingungen |
| Subject Keyword | Capital income taxation capital gains taxation tax reform wealth tax |
| Content Type | Text |
| Resource Type | Article |
