The Netherlands’ new tax experiment—and why investors should worry

the Netherlands has produced—under judicial compulsion and apparently with a straight face—is a mechanism that may force investors to sell assets simply to fund tax bills on gains that have not actually been realized.The broader concern is not the Dutch policy alone, but the trend it represents.Spend time in any corner of social media where economics is debated and you will encounter a growing community of neo-socialists who have arrived at a remarkable conclusion: socialism did not fail—it was simply never implemented properly.In this narrative, the Soviet Union, Maoist China and Cuba were merely flawed attempts at what is fundamentally a sound idea.The right people, armed with modern technology and the right intentions, will supposedly get it right this time.Within this worldview, taxing paper gains is not seen as overreach but as an obvious act of justice. The rich are simply too rich; their wealth—even the theoretical kind—is viewed as an affront that the state should correct.The notion that market value represents real money that the government is entitled to immediately, rather than when an asset is sold, fits neatly into this framework.

The idea is gaining quiet respectability in policy circles beyond the Netherlands.In the US, proposals for a billionaire minimum tax on unrealized gains have periodically surfaced.Once such ideas move from late-night Twitter threads into enacted law in a well-governed European democracy, they can no longer be dismissed as fringe policy experiments.India does not need to speculate about where this road leads. We have already been there.In the early 1970s, the tax burden on wealthy individuals was not merely high, it was mathematically absurd.