Monday, May 4

NYT: Going Dutch

I read this fantastic New York Times article on my lunch break yesterday. It is about the Dutch economic and financial system, written by an American living in the Netherlands. After reading this article, my brother's words seem more potent: If everyone truly understood real socialism, nearly everyone in America would be all for it.

For the first few months I was haunted by a number: 52. It reverberated in my head; I felt myself a prisoner trying to escape its bars. For it represents the rate at which the income I earn, as a writer and as the director of an institute, is to be taxed. To be plain: more than half of my modest haul, I learned on arrival, was to be swallowed by the Dutch welfare state. Nothing in my time here has made me feel so much like an American as my reaction to this number.
And yet as the months rolled along, I found the defiant anger softening by intervals, thanks to a succession of little events and awarenesses. One came not long ago. Logging into my bank account, I noted with fleeting but pleasant confusion the arrival of two mysterious payments of 316 euros (about $410) each. The remarks line said “accommodation schoolbooks.” My confusion was not total. On looking at the payor — the Sociale Verzekeringsbank, or Social Insurance Bank — I nodded with sage if partial understanding. Our paths had crossed several times before. I have two daughters, you see. Every quarter, the SVB quietly drops $665 into my account with the one-word explanation kinderbijslag, or child benefit. As the SVB’s Web site cheerily informed me when I went there in bewilderment after the first deposit: “Babies are expensive. Nappies, clothes, the pram . . . all these things cost money. The Dutch government provides for child benefit to help you with the costs of bringing up your child.” Any parents living in the country receive quarterly payments until their children turn 18. And thanks to a recently passed law, the state now gives parents a hand in paying for school materials.
Payments arrive from other sources too. Friends who have small children report that the government can reimburse as much as 70 percent of the cost of day care, which totals around $14,000 per child per year. In late May of last year an unexpected $4,265 arrived in my account: vakantiegeld. Vacation money. This money materializes in the bank accounts of virtually everyone in the country just before the summer holidays; you get from your employer an amount totaling 8 percent of your annual salary, which is meant to cover plane tickets, surfing lessons, tapas: vacations. And we aren’t talking about a mere “paid vacation” — this is on top of the salary you continue to receive during the weeks you’re off skydiving or snorkeling. And by law every employer is required to give a minimum of four weeks’ vacation. For that matter, even if you are unemployed you still receive a base amount of vakantiegeld from the government, the reasoning being that if you can’t go on vacation, you’ll get depressed and despondent and you’ll never get a job.
Such things are easy for an American to ridicule; you don’t have to be a Fox News commentator to sneer at what, in the midst of a global financial crisis, seems like Socialism Gone Wild. And stating it as I’ve done above — we’ll consume half your salary and every once in a while toss you a few euros in return — it seems like a pretty raw deal.
But there’s more to it. First, as in the United States, income tax in the
Netherlands is a bendy concept: with a good accountant, you can rack up deductions and exploit loopholes. And while the top income-tax rate in the United States is 35 percent, the numbers are a bit misleading. “People coming from the U.S. to the Netherlands focus on that difference, and on that 52 percent,” said Constanze Woelfle, an American accountant based in the Netherlands whose clients are mostly American expats. “But consider that the Dutch rate includes social security, which in the U.S. is an additional 6.2 percent. Then in the U.S. you have state and local taxes, and much higher real estate taxes. If you were to add all those up, you would get close to the 52 percent.”

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