World Economy

Dutch Would Be Undisputed World Champions

Higher corporate tax would have a more disastrous effect on the economy.Higher corporate tax would have a more disastrous effect on the economy.

The proposals to raise taxes for companies and high earners which the left-wing parties have included in their election programs are out of step with current trends and should be ditched, say economists Rick van der Ploeg and Willem Vermeend. 

The election date is drawing near and campaigns have kicked off. Important issues include health care, immigration, integration, security, jobs and pensions, Dutchnews reported. 

The parties on the left of the spectrum are making efforts to enter higher taxes on the election agenda as well. SP, GroenLinks and Labor are all in favor of raising taxes for companies and high earners. 

They feel such a move would be fairer and promote equality. They also need the money to finance the items on their wish lists, such as more spending power for people on lower incomes, lower health care costs and measures to protect the environment. 

The proposal is to raise the top income tax rate from 52% to 60%. The present top rate already ranks with the highest in the world and the 60% rate would make the Netherlands the undisputed world champion. 

In most European countries, as well as the United States, top income tax rates are set to come down. The move could open up a whopping 20% gap between rates. Companies and high earners paying the top rate are already moving to countries with lower rates. Another hike would very likely increase their number. 

A 60% tax rate is hardly a welcoming gesture. Companies will find it harder to attract international top talent and international start-ups will likewise look elsewhere. Then there’s the annoying fact that a hike of the top rate will cost money which will leave even less money to finance wish lists. 

Economist Bas Jacobs and a number of his colleagues have set the rate most advantageous to the Dutch economy at around 49%. The argument for not raising corporate tax is roughly the same. Higher corporate tax would have an even more disastrous effect on the economy, largely because of the worldwide corporate tax rate war. 

Countries have been lowering corporate tax rates in a bid to prevent companies from moving to countries with lower rates while at the same time attracting foreign companies.

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