The top income tax rate of 52% is too high, the government’s macro-economic planning agency says in a report published on Thursday.
The report says a top rate of 49% would maximise the amount of money coming in to the treasury. The current top rate is payable on all income over €56,000 a year.
Left-wing parties have been arguing for years for a higher top income tax rate, but the CPB says this would be a mistake. People would choose to work fewer hours rather than see more of their money disappear in tax, says the organisation.
The country’s prosperity would also be harmed by more people taking early retirement and the discouragement of entrepreneurial skills.
With people working less and the highly skilled opting to emigrate to a less burdensome tax area, the treasury would receive less money than if taxes were kept low, says the CPB.
During the last elections Labour and GroenLinks argued for a top rate of 60% and the Socialist Party SP for 65%.
Thank you for donating to DutchNews.nl.
We could not provide the Dutch News service, and keep it free of charge, without the generous support of our readers. Your donations allow us to report on issues you tell us matter, and provide you with a summary of the most important Dutch news each day.Make a donation