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Comparing the USA with the Netherlands: Income Tax and Government

Rather than confronting the political mess in my own Brexit Britain, I prefer to stay tuned with what is happening in the Netherlands and the United States. Slumped on the sofa in front of RTL Nederland, I am constantly reminded of the differences between the United States and the Netherlands. Recent events have highlighted how each country’s leader approaches failure: Dutch Prime Minister Rutte resigning after a child welfare fraud scandal vs Trump refusing to accept defeat and inciting riot on capitol hill.

Sure, it would be easy from my euro-centric position to champion Mark Rutte’s government over Trump’s 4 year presidency. But rather than triggering an argument, I would like to discuss key differences such as income tax and social benefits that are worth considering if you want to move to the Netherlands from the USA.

Max income tax 2021:

- Netherlands: 49.50% for incomes up to and including €68,507 = $82,070

- USA: 37% for incomes up to and including $518,401

Ok I know what you’re thinking: why would I work in the Netherlands if Rutte is going to steal all my money?

In general, people working and living in the Netherlands don’t mind paying high taxes. For those who have visited before: have you ever encountered a dirty Dutch high street? Potholes on a bike lane? Or do you know someone who was forced to commit bankruptcy after sending their kid to school? No. The high tax rate is reflected in the quality of public services.

Rather than allowing the richest 1% to live extravagantly, the Netherlands prefers to share wealth through taxing the affluent, ensuring the majority of the country can afford a good bicycle and a healthy slice of Gouda cheese.

High taxes support the welfare state, so that if you lost your job, or got sick from eating dodgy raw herring you are guaranteed a minimum income and access to affordable healthcare.

True, the Netherlands is not the country you come to if you want to be a billionaire – But if your aim is to live comfortably and enjoy efficient public transport it might just be the place for you.

Cultural differences lay at the centre of the Dutch vs US divide. The Netherlands is a country of big government, preferring state intervention to keep the country stable. By contrast the United States, in particular conservative Americans, argue for small government and minimal state interference.

There are positives and negatives to both sides. Arguably, a small government and state devolution work better in a large, diverse country like the United States. On the reverse side the benefits of a big government are obvious during a global pandemic, making it easier to pass legislation and place the country into a lockdown (it’s for your own good!)

Regardless, politics is all a matter of opinion. High tax, low tax, welfare state, no welfare state – it’s all about preference and culture. Neither is correct and the Netherlands is far from perfect. If you want proof look at our statistics from the OECD index report:

- 76% of Dutch people trust the government

- Dutchies rated their general satisfaction a 7.4/10.

There is still a long way to go to reach that perfect score.

This blog was written by Overseasy Intern Lizzy Patterson


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