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Fundamental Tax Reform in The Netherlands

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  • Sijbren Cnossen
  • Lans Bovenberg

Abstract

The Netherlands has abolished the tax on actual personal capital income and has replaced 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 with interest on the deferred tax, and a mark-to-market tax which taxes capital gains as they accrue. We conclude that the effective and neutral taxation of capital income can best be ensured through a combination of (a) a mark-to-market tax to capture the returns on easy-to-value financial products, and (b) a capital gains tax with interest to tax the returns on hard-to-value real estate and small businesses. Copyright Kluwer Academic Publishers 2001

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  • Sijbren Cnossen & Lans Bovenberg, 2001. "Fundamental Tax Reform in The Netherlands," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 8(4), pages 471-484, August.
    • Handle: RePEc:kap:itaxpf:v:8:y:2001:i:4:p:471-484
    DOI: 10.1023/A:1011287428702
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    Cited by:

    1. Leon Bettendorf & Arjan Lejour & Maarten ’t Riet, 2017. "Tax Bunching by Owners of Small Corporations," De Economist, Springer, vol. 165(4), pages 411-438, December.
    2. Sijbren Cnossen, 2018. "Corporation taxes in the European Union: Slowly moving toward comprehensive business income taxation?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(3), pages 808-840, June.
    3. Sijbren Cnossen, 2016. "Tackling Spillovers by Taxing Corporate Income in the European Union at Source," CESifo Working Paper Series 5790, CESifo.
    4. Sijbren Cnossen, 2002. "Tax Policy in the European Union: A Review of Issues and Options," CESifo Working Paper Series 758, CESifo.
    5. Bernd Genser & Andreas Reutter, 2007. "Moving Towards Dual Income Taxation in Europe," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 63(3), pages 436-456, September.
    6. Marcel Gérard, 2004. "Combining Dutch Presumptive Capital Income Tax and US Qualified Intermediaries to Set Forth a New System of International Savings Taxation," CESifo Working Paper Series 1340, CESifo.
    7. Leenders, Wouter & Lejour, Arjan & Rabaté, Simon & van ’t Riet, Maarten, 2023. "Offshore tax evasion and wealth inequality: Evidence from a tax amnesty in the Netherlands," Journal of Public Economics, Elsevier, vol. 217(C).
    8. Groot, Stefan P.T. & Lejour, Arjan M., 2018. "Financial incentives for mortgage prepayment behavior: Evidence from Dutch micro data," Journal of Housing Economics, Elsevier, vol. 41(C), pages 237-250.
    9. Niemann, Rainer & Sureth-Sloane, Caren, 2015. "Investment effects of wealth taxes under uncertainty and irreversibility," arqus Discussion Papers in Quantitative Tax Research 192, arqus - Arbeitskreis Quantitative Steuerlehre.
    10. Ganghof, Steffen, 2001. "Global markets, national tax systems, and domestic politics: Rebalancing efficiency and equity in open states' income taxation," MPIfG Discussion Paper 01/9, Max Planck Institute for the Study of Societies.
    11. Arjan Bruil (CBS) & Céline van Essen & Wouter Leenders & Arjan Lejour & Jan Möhlmann & Simon Rabaté, 2022. "Inequality and Redistribution in the Netherlands," CPB Discussion Paper 436, CPB Netherlands Bureau for Economic Policy Analysis.
    12. Stefan Groot & Arjan Lejour, 2017. "Tax arbitrage incentives for mortgage prepayment behavior: Evidence from Dutch micro data," CPB Discussion Paper 350.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    13. José Mª Durán Cabré & Alejandro Esteller Moré, 2007. "An empirical analysis of wealth taxation: Equity Vs.tax compliance," Working Papers XREAP2007-03, Xarxa de Referència en Economia Aplicada (XREAP), revised Jun 2007.
    14. Leon Bettendorf & Arjan Lejour & Maarten ’t Riet, 2017. "Tax Bunching by Owners of Small Corporations," De Economist, Springer, vol. 165(4), pages 411-438, December.
    15. Stefan Groot & Arjan Lejour, 2017. "Tax arbitrage incentives for mortgage prepayment behavior: Evidence from Dutch micro data," CPB Discussion Paper 350, CPB Netherlands Bureau for Economic Policy Analysis.
    16. Bernd Genser, 2006. "The Dual Income Tax: Implementation and Experience in European Countries," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0625, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    17. Cnossen, S., 2002. "Tax policy in the European Union : a review of issues and options," Research Memorandum 023, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    18. Alessandro Balestrino & Umberto Galmarini, 2005. "On the Redistributive Properties of Presumptive Taxation," CESifo Working Paper Series 1381, CESifo.
    19. Rainer Niemann & Caren Sureth-Sloane, 2019. "Investment timing effects of wealth taxes under uncertainty and irreversibility," Journal of Business Economics, Springer, vol. 89(4), pages 385-415, June.
    20. Sijbren Cnossen, 2016. "Tackling Spillovers by Taxing Corporate Income in the European Union at Source," CPB Discussion Paper 324, CPB Netherlands Bureau for Economic Policy Analysis.
    21. Rainer Niemann & Caren Sureth-Sloane, 2015. "Investment Effects of Wealth Taxes under Uncertainty and Irreversibility," CESifo Working Paper Series 5610, CESifo.
    22. Sijbren Cnossen, 2016. "Tackling Spillovers by Taxing Corporate Income in the European Union at Source," CPB Discussion Paper 324.rdf, CPB Netherlands Bureau for Economic Policy Analysis.

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