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Extreme wealth inequality is detrimental to societies. It leads to less trust in the government, less social cohesion and a greater risk of political influence by a small group of wealthy individuals. There is fierce debate about this in Europe, but in the Netherlands it seems to have little political influence and is dismissed as a “left-wing” or “radical” issue. Yet this presents an enormous opportunity for countries to respond to dissatisfied voters and finance the necessary expenditure on security and reforms. What should we do in Europe, and in the Netherlands in particular?
At the congress of the Party of European Socialists (PES) in Amsterdam, a classic theme for left-wing politics was on the agenda twice. As FMS, together with Oxfam Novib and Tax Justice NL, we a panel discussion with experts on national and European initiatives to achieve a fairer tax system. The main stage featured Gabriel Zucman, a French economist who is rapidly gaining the kind of rock star status enjoyed by Thomas Piketty, for example. He presents a simple plan: let the ultra-rich pay at least 2 per cent tax on assets above 100 million euros – the so-called Zucman tax. In many European countries, this idea is leading to heated debates. In the Netherlands, however, it remains remarkably quiet. How is it possible that a country with high wealth inequality has hardly any political debate about taxing extreme wealth?
The wealth debate in Europe
That the Zucman tax is political traction was demonstrated this year in France. The Socialist Party supported Zucman's idea and even went further with a proposal for a 3% tax on assets above €10 million. According to party leader Olivier Faure, this was the best way to avert an impending crisis. However, 86% of French people before a capital gains tax did not matter much. For the right, the ‘Zucman tax’ was too left-wing and the party Emmanuel Macron and Les Républicains voted against it.
The debate also flared up in Norway. After the 2021 elections, the existing wealth tax, the wealth tax, tightened. Unfortunately, it became a central theme in this year's elections. Right-wing populists, led by Sylvi Listhaug, warned of capital flight and portrayed the measure as a threat to entrepreneurship and innovation. That message was eagerly taken up on social media and YouTube channels that target young men. The underlying logic was always the same: taxing wealth drives capital out of the country.
Where is the Netherlands in the debate?
Organisations such as Oxfam warn for growing wealth inequality. The richest 10 per cent now own 56 per cent of all Dutch wealth. If we look at the richest 1 per cent, who owns almost a quarter of the total. The wealthiest Dutch individuals in the Quote 500 saw their assets increase by increase by 8 per cent up to €273 billion, partly thanks to investments in crypto and artificial intelligence. At the same time, on average, they pay, significantly lower tax than the rest of the population. Whereas most people pay around 45 per cent tax on their income, the effective rate for this group is around 20 per cent.
That is no coincidence. The Dutch tax system heavily taxes labour and lightly taxes property. Assets can easily be placed in private limited companies, holding companies and family foundations. Parties say they are concerned about inequality, but shy away when it comes to extreme wealth. Since the High Court's box 3 ruling in 2021, politicians have also been keen to hide behind the argument of ‘complexity’. A wealth tax would be too risky legally and too complicated technically.
The blind spot
An important part of the answer lies in public perception. Dutch people underestimate structural inequality in the distribution of wealth. Right-wing voters in particular underestimate wealth inequality far more than it actually is. This misperception is not harmless. It influences how people think about taxes, opportunities and justice.
During the recent elections, several parties, including GroenLinks-PvdA, D66, Volt, ChristenUnie and SP, included proposals for a form of wealth tax in their manifestos. their programmes. Together, they hold 53 seats. Not enough for a majority, but enough to put the issue on the agenda in a structural way. Nevertheless, the debate on economic inequality remained superficial, overshadowed by politically safer topics such as mortgage interest relief.
Extreme wealth as an issue
Initiatives such as the Zucman tax are dismissed as threatening economic growth and investment. This argument is often repeated, but rarely substantiated. A wealth tax for the very richest will not reverse inequality in one fell swoop. At most, it will slow down its growth. That is precisely where the political significance lies. Extreme concentration of wealth is not only an economic problem, but also a democratic one. When a small group contributes less on a structural basis, while still benefiting from public services and political influence, this undermines support for the entire tax system.
The Netherlands was, surprisingly, the first country in the world dat introduced a wealth tax in 1892. The fact that this system was later abolished does not mean that the idea is outdated. The knowledge, data and proposals are available today onbright bieconomists such as Zucman and in research by organisations such as Oxfam. As long as extreme wealth is seen as a success story rather than a democratic problem, nothing will change. And as long as nothing changes, nothing will change. The question is not whether the Netherlands can afford a wealth tax, but when it will find the political courage to seriously discuss the limits of wealth again.
