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The Netherlands is taking action against the brain drain by rapidly importing highly skilled migrants through various tax lowering schemes in the first five years of living here.

However plenty of those people leave after that period. Especially with the upcoming 36% unrealized capital gains tax on all your savings and investments.

Feels a bit like ISPs giving discounts to new customers only.

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> 36% unrealized capital gains tax

This sounds like the Netherlands speed running their way out of investments. If a country I was living in proposed this, I would be leaving ASAP, or getting some heavy financial engineering done.

This is misleading. It's actually taxing 36% of _assumed gains_ of say 5% on all assets. So if you have $1M in savings, you'll end up paying 1.8% or $18K/annum, regardless of the actual investment return. I can see it would be painful during down years, but most of the time it would be ok.

That is the current system. In the new system it will be 36% on all capital gains, no more assumed gains. And an €1800 a year tax-free threshold.

Also it's a bit more, right now you are looking at 36% on 6% or 2.16% per year with a €59k threshold. So a bit over €20k a year on that €1M.

Actually that makes more sense? If you lose money on your investments, I suppose you can write it off next time?

You can write it off against future capital gains, but not against income tax from employment. So if the market is down a few years, you gain a lot of tax credits and you pray that the government doesn't get rid of those credits in the mean time.

No, that's not ok.

Many years ago, a friend of mine in the Netherlands had the same job as another guy, earning the same money, my friend being extremely thrifty, the other guy splurging. When they both found themselves out of a job at the same time, my friend got no support from the government as he had savings, while the other guy started getting a very generous allowance.

This goes directly against all that is reasonable. This is directly discouraging financial responsibility. My friend is thrifty just for the sake of it, he knows it's not in his interest. But he gets the short end.

Same situation in the UK. Even a modest amount of savings (a few months of your salary) is enough to disqualify you from the majority of benefits, childcare etc.

Correct. If you go over €38.478 in savings, you immediately lose your renters benefit. No taper, just a hard drop-off. You can lose up to €5.000 in renters benefit a year.

A legal tax avoidance is to just buy a €1000 TV if you are near the limit. Yes that is as crazy as it sounds but people do it.

This is true in the US too. I know people who are disabled here who can not find a job because if they start making minimum wage they loose all their benefits.

> brain drain

Where are they draining to?

On unrealized gains, wait, what??

Yes.

Say you have €80k in investments. Markets go up, in one year time your investments are worth €90k. You did not sell.

That means you had €10k in unrealized capital gains. Subtract the €1800 per person threshold. €8200, 36% tax is €2952 tax to be paid at the start of the year.

Losses give you tax credits redeemable against future capital gains (not against income tax from employment)

Assuming you're not going to somehow avoid paying your tax when you do eventually liquidate, paying year to year is not that crazy.

Paying tax on money you make because you already have money is far better than playing tax on your time you sold for salary.

How does that even work? What does it apply to? Say I own a 100% share in a business, each year does the government appraise it and pretty much require me to divest a portion of it to pay the tax?

Unrealized capital gains taxes are crazy all in an effort to own the rich or something. Meanwhile the people they're perceived as targeting have all the resources to avoid it.

Yes, you are supposed to either sell part of the stocks to cover the yearly tax or you need to dip into your savings account to find money to cover the tax.

I don't know about non-publicly listed companies, I assume you indeed need to appraise yearly.

The rich don't pay these taxes as the unrealised capital gains tax is only for private individuals, not companies. The rich have their assets in companies / shells.

A 36% tax?! Nobody's going to invest in that environment, since the taxes will really sap your effective compounding rate. That's a great way to push all your finance people out of the country.

I think you will find people are investing. And working.

And bailing out for the US, understandably, as soon as their hard work starts to pay off.

Well, that's how it used to go, anyway.

Why is this shocking? Surely if you hadn’t grown up with the very technical idea of unrealized gains, this would seem totally normal. The surprising thing is that we let ourselves be convinced in the past that making money with money should be tax advantaged compared to making money with labor.

Unrealized gains are gains.

Do you have to pay tax on unrealized gains with realized money? A classic problem with exercising employee stock options and holding the stock is that you have a tax event on the unrealized gain, but if the stock drops substantially, you still owe the tax money on the unrealized gain, but you cannot sell the stock for enough to pay for it. This happened to a lot of people around 2001.

Paying for unrealized gains with realized money is not a situation anyone want to be in.

I was thinking of 'real' holdings rather than options that don't have a liquid value. Not all unrealized gains are the same. Thanks for pointing out the complexity.

It's every bit as stupid as it sounds, and IMHO it's probably why we have Donald Trump in the White House today. Harris started talking about taxing unrealized capital gains almost immediately after she was nominated, and that's when the billionaires -- including the ones that own all the media outlets -- started switching sides.

Brought to you by the same party of self-defeating geniuses who thought they could win elections in Texas on a gun-control platform.

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