Is the Netherlands really as wealthy as Lilian Marijnissen claims?

Is the Netherlands really as wealthy as Lilian Marijnissen claims? | Fact check

This fact check was carried out in the context of the joint fact check marathon of AD, Nieuwscheckers and Pointer (KRO-NCRV) in the run-up to the House of Representatives elections on November 22, 2023. View all fact checks here.

What is power?

Let’s start at the beginning. In general, wealth is about wealth. More specifically, wealth is the value of all assets, including savings, real estate and shares, minus debts. Unlike income, wealth can also be negative. If the debts are greater than the value of the assets.

Another difference: income is real money that you can buy something with, while assets are often tied up in, for example, a company, land or home. You can’t pay bills with that. Wealth inequality is described – in the Van Dale dictionary – as ‘great inequality in the wealth position of the members of a community or society’. If that difference is relatively large, it is also referred to as a wealth gap.

It is not only the SP that is convinced that there is such a wealth gap in our country. Several parties in The Hague are concerned about this, perhaps also because it is not actually clear what exactly we are talking about. This led to the government ordering an investigation into this. This was completed in the summer of 2022 by a working group of financial experts from the Netherlands Authority for the Financial Markets, various ministries, the Central Planning Bureau, the Central Bureau of Statistics and De Nederlandsche Bank.

What turned out? Prosperity in our country is even more unfairly distributed than expected. 10 percent of the richest Dutch people own 61 percent of the wealth, 1 percent even own a quarter of the total wealth. On the other hand, a quarter of households actually have debts. The wealth of the richest households in particular was initially underestimated, the researchers said.

One of the causes of the growing difference is the current tax system in which people with wealth and top incomes pay proportionately less tax. Inheritance and gift taxes also contribute to wealth inequality, mainly due to the so-called business succession scheme (BOR). Through this scheme, intended to enable businesses to continue, people pay much less tax than with inheritance or gift tax without BOR. Furthermore, wealthy people can make more use of favorable tax structures and they more often have the means to receive advice on this, according to the researchers.

Marijnissen thinks it is impossible. “After the US, the Netherlands has the greatest wealth inequality in the entire Western world,” she said in a Q&A at NOS in the run-up to the elections.

It’s not the first time she’s started talking about this. She didn’t come up with it herself. And she has a solid source. She is based on a 2018 report from the OECD. This is the Organization for Economic Co-operation and Development, in which 36 Western countries discuss economic and social policies.

That report shows that the wealth inequality of Dutch households is greater than that of all the other 35 countries, with the exception of the United States. Only there is the difference between the richest and the poorest even greater.

Marijnissen therefore follows the OECD. But the OECD research does not tell the whole story. Because the countries do not all use the same calculation methods, calculations and definitions, it is difficult to make a very precise international comparison of wealth inequality. For example, differences in facilities and income support measures per country are not taken into account.

Peter Hein van Mulligen, chief economist at the Central Bureau of Statistics © CBS / Alrik Swagerman

Such as pension assets. While in most countries people have to save their own pension, the Netherlands (and this also applies to Denmark, which is in third place in the OECD list) has extensive collective pension provision. However, this is not taken into account, because people do not directly own that capital and cannot give it to someone else.

And that matters quite a bit. Pension assets account for almost half of total assets, according to figures from Statistics Netherlands. If it is included, the differences in wealth will become smaller and the Netherlands will end up in the middle of the OECD countries, Peter Hein van Mulligen of CBS said earlier this month.

In fact, there is no question that the Netherlands has the greatest wealth inequality in the Western world after the US. Yet the Hague working group concluded that prosperity in our country is ‘even more unfairly distributed than thought’. In the research report ‘Lights off, spotlight on: the wealth distribution’, the working group noted the following, among other things:

According to the researchers, having assets and a certain degree of wealth inequality is ‘a characteristic of a healthy, competitive economy’, which involves good entrepreneurship and a smart response to changes in society. ‘Entrepreneurial capacity has great social value’, the working group stated, ‘when this capacity resides in companies that provide employment and when this capacity is used to respond to challenges of the future, such as sustainability.’

But too much wealth inequality also has negative effects on the economy and society as a whole, the researchers warned. ‘Too high a concentration of wealth among a small group of households can lead to economic and political power (…), to the enrichment of private interests that do not necessarily contribute to social interests (…) and to disproportionate influence of these group on public opinion and political decision-making’.