Assets distribution in the Netherlands skewed, 1 percent own quarter of capital

A quarter of the total assets in the Netherlands are owned by 1 percent of households. And for one in four households, they have a net debt.

The distribution of assets in the Netherlands is skewed than expected, according to the conclusions of a working group led by Laura van Geest, chairman of the Authority for the Financial Markets. The working group includes financial experts from various ministries, the Central Planning Bureau, the Central Bureau for Statistics and De Nederlandsche Bank.

Differences between income groups are growing as a small group benefits from their shares – more than previously thought – and from rising house prices. The tax burden is also lower for the top of 1 percent most wealthy than for other households.

The wealth gap between salaried people and people with their own business has increased due to certain tax rules. The difference between tenants and home owners is also increased by the tax deduction for mortgage interest.

‘Learning from big differences’

The cabinet has asked for the analyses and advice due to the growing wealth inequality. Minister Van Gennip of Social Affairs said: โ€œThe fact that there is inequality in the Netherlands is one. That it is so big, we have to learn something from thatโ€.

The researchers outline various solutions. For example, it would be good if the government annually visualizes the tax constructions of wealthy taxpayers, so that it becomes visible how tax rules work out in practice.

Furthermore, the researchers outline packages of tax measures, such as abolishing the low corporate tax rate and abolishing the SME profit exemption deduction item. The tax burden can also be distributed more fairly in the case of capital transfers, such as business succession, inheritances and donations.

Mortgage interest deduction

As a solution to the difference between people with their own homes and tenants, the working group mentions reducing the mortgage interest deduction and the home lump sum, and taxing profits in the long term when selling a home. Taxing the property as a property, in box 3, is not seen as an option.

Prime Minister Rutte said in his Friday press conference that, as far as he was concerned, the first own home and relatively small pensions will fall outside the measures.

In the coming weeks, the cabinet will think about the study and expects to come up with measures towards Prinsjesdag. โ€œThere are already a lot of clear signals to be received from this study,โ€ says Minister Kaag of Finance.