Support among economists for taxing income from wealth has increased significantly in recent decades. Aart Gerritsen, Associate Professor at Erasmus School of Economics, says this in an article published by Dutch newspaper Trouw on 22 August. According to Gerritsen, a tax on capital income is difficult to avoid if the principle is that taxes should be levied according to people’s ability to pay.
One important argument is that people do not earn the same returns on their wealth. According to Gerritsen, wealthier people have access to better financial advisers and can afford to take greater investment risks. As a result, there are differences not only in the amount of wealth people own, but also in the income they generate from it.
Gerritsen says the current economic consensus is that income from wealth does not necessarily need to be taxed at the same rate as income from work, but that the two could be brought more into balance. This is particularly relevant in the Netherlands, he argues.
Gerritsen also supports reducing tax subsidies for home ownership and pension accumulation. This could create room for other government spending or for lower taxes on labour. At the same time, he is not optimistic about the political feasibility of such reforms. ‘As we see every political cycle, it proves very difficult to address this from an electoral perspective,’ Gerritsen says.
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Click above for the article in question from the daily newspaper Trouw.
For more information, please contact Ronald de Groot, Media & Public Relations Officer at Erasmus School of Economics: rdegroot@ese.eur.nl, +316 53 641 846,
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