The Most Unequal Country: Part 1

Dutch Politics: All about the Rich

The Netherlands: it is a great country to live in. It is a strong social welfare state, where the children are among the happiest in the world and  where there is strong social security, low rates of (youth) unemployment, relatively high wages and low income inequality.

[1] At first glance it seems like a perfect country. For that reason, Sylvain Ephimenco wrote in 1998: “The Netherlands is finished like a house can be finished, with a house that is finished down to the last drop of paint, the last doorknob, the ultimate plant on the windowsill”.
[2] This, however, is not the case (anymore). Whereas income inequality may be low, the Netherlands was the most unequal country in the world in 2018.
[3] This wealth inequality can not only be seen in numbers, but also in politics. Looking at Dutch politics, it is all about the rich. Most recently this can clearly be seen in the difference in response to the benefits scandal versus the recent verdict of the Dutch Supreme court about tax box 3.

The benefits scandal — which caused the fall of Rutte III — started in 2004. To combat fraud with childcare allowance, the government became very strict in checking whether people were eligible for this allowance. This led to 26.000 parents being accused of making fraudulent benefits claims, whilst in reality they made minor mistakes in filing, or were misled by childminder agencies. These parents had to pay back all ‘fraudulent’ benefits, which often meant thousands of euros.
This caused immense financial and personal hardship, as people got evicted from their houses, lost custody over their kids, and developed psychological problems. For years, nobody believed their cries for help. Attention was finally brought to this topic in 2015, however, it was not until 2019 that the extent of the problem was recognized and an investigation was launched.
Whilst these parents finally received apologies from the government in 2020 and 2021 (over 15 years after the mistreatment began), the compensation process has been arduous and a lot of damage is irreversible. Psychological problems deriving from this scandal will unfortunately haunt the victims for years. 

Whilst the parents affected by the benefits scandal had to fight for years for justice, this was/is not the case for the recent outrage around the ruling of the Dutch Supreme court about tax box 3, which was finalized on 24 December 2021. The Supreme Court ruled that the way the Dutch tax authority had previously calculated the owed taxes in box 3 — targeting the taxation of assets —  violated the European Convention on Human Rights.
[4] Between 2017 and 2021, the Dutch Tax Authority did not look at the actual return of investment (ROI) people made on their assets, but merely assumed a certain percentage. Furthermore, they assumed that people invest at least 33% of their savings in stocks, investment funds or real estate. In reality however, people keep the majority of their assets in savings.

These two mistakes meant that during this period from 2017 to 2021 people paid more taxes than necessary because despite the Tax Authority’s assumption, they did not make any (substantial) return of investments, even though they paid taxes over a presumed ROI. Especially the wealthy people in the Netherlands, who, contrary to lower-income households, do have substantial savings, were affected by this. It was their dissatisfaction that eventually led to the Supreme Court’s ruling, less than five years after the mistreatment began.

Whilst of course these cases are two different issues and cannot be directly compared, they are a good embodiment of the wealth inequality in the Netherlands. The parents involved in the benefits scandal had to fight for years to receive attention and to prove their innocence, whereas the wealthy people involved in the tax box 3 case received immediate attention. The response of the media to this news was exemplary, with immediate calls to action, saying that this problem has to be fixed as soon as possible. Where was this urgency and support from politics and media when the benefits scandal parents first stood up?

Stay tuned for part 2: What Rutte III did not do, and Rutte IV will not do. In which the reason behind the Dutch wealth inequality will be explored.

by Joost Kamp





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Images from Unsplash


[1]Worlds of Influence

[2]Nederland is af – De Groene Amsterdammer

[3]Global wealth databook 2019

[4]Staatscourant 2022, 4198 | > Officiële bekendmakingen

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