A new report published by the Netherlands Bureau for Economic Policy Analysis (CPB) has revealed the scale of wealth inequality in the Netherlands, with figures showing that the top 1 percent of the population pay less tax than other households.
While the Netherlands has a bit of a reputation for high income taxes, figures published by the CPB on Friday show that the wealthiest households - also known as the 1 percent - pay, on average, less tax than other households, as their income is largely made up of capital income and retained earnings, which are taxed at a lower rate than salaries.
Furthermore, the highest earners tend to spend a smaller proportion of their monthly income compared to middle and lower-income earners, meaning that the wealthiest people are paying relatively lower indirect taxes in comparison to their income.
“The research shows that the strongest shoulders do not carry the heaviest loads,” the CPB writes, pointing out that the total tax burden for middle and higher-income earners is approximately the same.
The Inequality and Redistribution study conducted by the CPB in collaboration with Statistics Netherlands (CBS) also looked into the redistribution of wealth in the Netherlands, calculating the impact of various Dutch taxes as well as government spending on education, healthcare, and social security.
CPB found that taxation plays a limited role in the redistribution of income between Dutch households and families, as the Dutch government is “mainly responsible for redistribution through expenditure.” Lower-income households benefit from direct government support in the form of various benefits, meaning that they “benefit more from public spending than [people with] higher incomes.”
Measures put in place by the government, therefore, mean lower-income households account for 29 percent of the national income, instead of 19 percent, while the wealthiest 10 percent account for 25 percent instead of 32 percent.