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.
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Cnossen, S., Bovenberg, L. Fundamental Tax Reform in The Netherlands. International Tax and Public Finance 8, 471–484 (2001). https://doi.org/10.1023/A:1011287428702
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DOI: https://doi.org/10.1023/A:1011287428702