How The Dutch Economy Shows We Can't Reduce Wealth Inequality With Taxes | Economics Explained

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This is the Netherlands, a picturesque nation filled with windmills, tulip fields, and uhh coffee shops.

The nation is looked to by many as an extremely forward-thinking place that practices some pretty progressive policies. The nation has an incredibly strong social security system, with universal healthcare, robust retirement pensions, as well as allowances for maternity leave.

And These kinds of policies are mirrored in other areas as well, the nation is home to relatively high tax rates, and the protections for employees are very strong almost to the point that people joke it is impossible to be fired in the Netherlands.

So this kind of looks like a liberal paradise right? Well, it would if it were not hiding a dirty little secret.

This postcard-perfect little nation is according to the world bank the most unequal place on earth, and the extent of the inequality is simply staggering.

We have explored south Africa on the channel before, which normally gets this less than a desirable title. And if you were to pose this question to google, it’s what you would walk away thinking. But this isn’t the whole story.

In terms of wealth inequality in recent years, South Africa has been pretty tame. The Netherlands by contrast is the only country on earth that is more unequal than the world itself.

So what is going on here?

Similar policies to the ones that have been commonplace in the Netherlands for decades are being proposed by politicians in places like the United States as a way to curb the issue of wealth inequality. But if we look at the results it doesn’t look like they will do that at all.

So, to really understand this we are going to look at a few key issues.

How did the Netherlands of all places become the land of inequality?

What does this teach us about the nature of wealth in the modern world?

And how can this help us create more robust economic policies that work to benefit everyone?

And of course, while we are here we will call this a country video and put the Netherlands on the economics explained leaderboard.

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[UNNIE]

I am Indian guy living in Netherlands 🇳🇱. If what I see here is inequality, then I wish it spread into every country in the world 🌎

[chrispens]

Surely the lesson from this is that giving ordinary people access to healthcare and a reasonable standard of living is not a threat to the rich elites.

[verneholtslander]

What I learned from this video is that certain metrics can be used to show numerical inequality, but are worthless to demonstrate differences in quality of life.

[mannycalavera]

Having lived in the Netherlands all I can say is that the minimum standard of living that they provide is something I found very valuable in a society. And perhaps the equality of access to healthcare and education is more important than any other equality that you can measure.

[pputra]

It’s fine to have high inequality as long as the poorest can afford quality education/health/food/shelter, etc. Inequality is not the problem, poverty is.

[jasonhaven]

Thank you for putting English subtitles on this great video, it really helps people with deafness like me

[suomiprkle]

If this video were called "How to make the Netherlands most inequal country in the world by cherry picking data" it would be great.

[twisted_void]

My main take from this video is that sometimes statistics, when observed outside of context can lead to incorrect conclusions, because Dutch cuisine aside, life in the Netherlands is great. :)

[WalvisYT]

The Dutch have one of the most complex tax systems in the world. This video serves as proof that you cannot just understand it quickly, as the author got so many things wrong.

[Gaswafers]

"making home loans completely risk-free"
Hey, I've seen this before. It's a classic.

[Silverwidows]

My friend who lives in the Netherlands said "The poorest dutch people are much wealthier than the poorest people of most other nations"

[alexable]

I might not buy a house here but I would definitely want my children to have the advantage of quality education and healthcare that the Netherlands offers. Plus the culture exposure here and similar countries is something I would definitely want my family to experience. There are much worse and unsafe places to live.

[EleonJonker]

As a Dutchman, I can say that many of the facts that are put forward are incorrect. As an example the mortgage interest deduction, this works really differently than stated.

[abhigyanbg]

8:26 Yes they are literally underwater.

[brianfitzgerald]

As one of the young beneficiaries of that 110% Mortgage policy 30 years ago, I was amazed at how easy it was to buy a house with no collateral. Today I'm, as the Dutch say, "Stone Rich" and extremely thankful. My kids got great educations, medical procedures that would have bankrupted me in the States have been covered by a robust health insurance, and I may wince at the taxes I have to pay, but I'm happy to see the evidence of them being well spent on a daily basis, from infrastructure improvements like bike lanes and new bridges to the near absence of homelessness.

[DaanDaniel]

Hi as a tax law student I would like to say that in the Netherlands most forms of passive income are not directly taxed. The housing market in the Netherlands is the biggest motor to inequality. Many independent surveys have come to the same conclusion that the Dutch tax system in it's current form actively creates inequality. A list of examples of things that are tax free in the Netherlands: renting out real estate, stock gains and dividends, art, yachts and renting them out and inheriting an active business. The Dutch tax law is so complex and riddled with exemptions that only those who can afford a good tax adviser can pay close to zero tax.

[jobkroon]

This is the type of research you get kicked out of a university for

[edwinvermeulen]

As a dutch person, i want to correct a few things:
1st) once you own more then one house the mortage is not tax reductable anymore. There are however different systems you can apply to but they are all based on buisness model.
2nd) Every government funded loan, has a 25 year failsafe plan, that means that after 25 years all remaining loans are considered abolished if your income is not above a certain amount.
3rd) Inheritence can be wavered, wich means you will not inherit debt from your parents.
4th) Unlike many other countries, housing in the netherlands is considered a commodity not an investment.

[fossie]

The information in this video is outdated by almost 10 years. After the housing bubble the Dutch government put systems in place where loaning more than 100% of a mortgage is not possible. That is combined with having to have a downpayment of 20% on the worth of the house. This is one of the reasons why millennials in the Netherlands have the lowest home ownership rates in Dutch history.

[LindaMiller-tsos]

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