Reducing or Sustaining Inequality?

Nederlands Dagblad
Erasmus School of Economics

Reducing inequality has not been the government's top priority so far. In three recent government interventions, the government chose to be generous to all income groups instead of only the low-income groups. There is hope for change, because the Rutte IV cabinet is finally embracing the idea that the strongest shoulders can bear a little more. Ivo Arnold, Professor of Monetary Economics at Erasmus School of Economics, gives his opinion on the government’s inequality policy in het Nederlands Dagblad (20 April 2022).

The past 12 years

For the past 12 years, the government has been paying little attention to inequality in the Netherlands. Now, prime minister Rutte seems to reflect an upheaval. He is in favour of starting a more general trend in which more taxes are levied on capital for the benefit of lower income groups. Arnold doubts the prime minister’s motivation. He argues that the inequality issue was no longer deniable for the prime minister due to a critical report by the Central Planning Bureau.

Actions

Although the prime minister claims that he is motivated to start a new general trend, he also warns, that this general trend should not be implemented too quickly due to capacity issues at the Tax authority. The new plans will be implemented somewhere in 2025.  The professor assesses that elective reasons play a role in this lack of urgency, with the prime minister’s political party being a more right wing party. Because, ironically, plans to compensate wealthy savers who wrongly paid too much capital tax, can be implemented very quickly.

The professor concludingly assesses that the strongest shoulders in society benefit the most from the government’s policy, without any compelling economic reason. The scarce public resources are therefore not only used for the people who really need them.

Professor
More information

For the whole item, 20 April 2022, click here.

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