Categorie: Taxes

Topics where an undesirable effect is seen by a tax measure and proposals to improve it.

basic income tax percentage 2

The basic income can be initiated affordably

€ 1,500 net per month unconditional for everyone. This is how high a basic income should be in the Netherlands. With this, for example, a two-person household can manage on their joint basic income of € 3,000 per month. This with minimal expenses and a rent of € 1,000 per month in the free sector. The way to cover this has now been found and involves closing loopholes and disallowing certain tax benefits from companies. This means that the tax that is levied on all other income, without further deductions such as mortgage interest deduction and labor discounts, can be set at 55%. That 55% is a percentage that can then always be used, without having to go down for low amounts and up for high amounts. With a tax-free basic income for everyone. 55% is a percentage with which it still pays to work more and to do more business. After all, it is only slightly higher than the current highest income tax rate. So of everything you earn on top of the basic income, 45% is unconditionally yours.
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Apply the capital gains tax fairly on the yield obtained

The inequality between wealthy and employees is growing. Thomas Piketty provides in his two books an extensive analysis of how the difference between rich and poor is getting bigger and what the disadvantages are. This is not only due to the difference in assets and the differences in deductions for companies, but also due to the ability to grow assets almost untaxed. It shouldn’t really matter why you get richer, you should always pay tax on the benefit you get when it gets more. If we don’t, we should also be questioning income tax. That is why the capital gains tax should also be improved. Not based on a fictitious return but on an actual return. And not only the return through interest or profit distribution, but also the return through increased value of things that have been sold.
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Always tax actual profits in the consuming country

The international tax principle should be that the profit is made in the country where the revenue is generated or where the added value is provided. Where the revenues have been generated can be determined by payment by the consumer, or by payment of the marketing addressed to a consumer. The consumer can also be a company. Whether the profit ends up in the producing or the consuming country is in principle up to the free market. That works until a supplier is a dominant player in the world market and can therefore shift profits between subsidiaries. For those situations, the money must be taxed at source, so on the consumer’s side. After all, most prices are based more on what the fool gives than what it costs to make it.

In order to close any loopholes, there must be a solid way to prevent profits from being shifted through normal costs. The so-called “transfer pricing” is the main way this is done. This means that goods are delivered on paper at cost price to a sister company in another country and are then compulsorily bought back at market value. In the country that both put the effort into production and paid for the actual sales by consumers, the proceeds of the profit are not shared. This is so obviously taking advantage of loopholes that a simple ban should suffice.
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Turn royalties and interest into taxable profit

For years, the Netherlands has explicitly or implicitly had a policy that companies should be welcome in the Netherlands because this creates employment. The result is that many companies use Dutch tax law to pay little or no tax in constructions with other countries tax laws here and in those other countries. These constructions mean that companies that make a profit in the Netherlands can also transfer this profit abroad and pay little or no tax here. You can solve a large part of this problem immediately by labeling interest and royalties as a profit distribution. Interest and royalties are often set by companies so high that they are high enough not to make a profit in the country where they sell their goods or services. This means that a large part of the royalties and interest is in fact a dividend payment. So it would be more equal if all dividends, royalties and interest were always seen as profit distribution.
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Make companies pay taxes before reinvesting

There is a difference in what you can deduct as a company compared to an employee to ensure that you do not have to pay tax. After all, companies can do something very strange that would never be allowed by employees. They can postpone paying the tax for the future by not paying out the profits they have received, but reinvesting them. The system is therefore designed in such a way that the money must remain in a company for as long as possible and there must never be any profit or profit distribution. After all, the latter two are associated with paying taxes – and thus with contributing fairly to society. Have them deduct only the purchase costs, labor costs, and depreciation of investment costs that contributed directly to the relevant revenues. Using this definition, companies have made a lot more profit in the past year and have to pay a lot more corporate tax than they do now. That’s because I deliberately don’t mention two deductions: failed investments from the past and upfront deductions for future business. The abolition of these two corporate deductions will close an important loophole in the tax law and ensure a level playing field between start-ups and growing companies.
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Simplify social services with a universal basic income

At the moment we have a social system where you are protected at the bottom by a social assistance benefit. Wouldn’t it be better if there was an unconditional basic income for everyone so everyone can really make ends meet. For example EUR 1,500 net per month unconditionally for everyone over the age of 18. It’s possible!
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Make income tax and profit taxation comparable!

Over time, tax law has grown into a stronghold with different routes and associated different tax rates and deductions. This means that inequality has crept into the system, which, according to Piketty, is also causing inequality in society to grow. In my opinion, it should not matter through which route a euro arrives at a private person, the percentage of tax paid on it should be the same. The essence must be, if you have earned something from the Nederlands, you give the same percentage to the State as the others who earned something from it. Paying a lot of tax thus gives the status of having a lot of earnings. It makes a big difference whether you contribute almost 50% tax on every extra euro, or just under 40%. At the moment, it is mainly the shareholders of multinationals who have been given ways to not only have an even lower tax rate, but even avoid it. What is actually stopping us from making the Netherlands a bit more thorough?
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Improve capitalism through progressive corporate taxation

Companies merge because they think they have no right to exist. The downside is the emergence of semi-monopolies where the remaining parties increase their prices until a small party decides to step in. However, there is still hope, with a small adjustment the natural path can also be one with more competition. This can be done with a simple measure, namely charging companies an increasingly higher percentage of profit tax as they have larger profits.
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