Inequality and Redistribution in the Netherlands

This paper combines detailed administrative records on the universe of the Dutch population with national accounts aggregates to provide a thorough description of income inequality before and after taxation and government spending. Accounting for domestic andforeign retained earnings has a substantial impact on inequality, raising the top 10% share of pre-tax national income from 29% to 31%. Overall, the tax system is regressive due to high consumption taxes and a low tax burden on capital income. The entire reduction in inequality - the top 10% income share falls to 26% - comes from government spending that is targeted at the bottom of the distributio