Netherlands

The US income tax system has a special carveout for investors. The top income tax rate on earned income (wages) is 37% but the top tax rate on unearned income (investments) is only 20%. It has often been proposed to do away with the special break for investors and the Netherlands recent did the equivalent. They passed a law to tax the unrealized gains on investment. In the past the tax on gains would not take effect until the investment was sold. You buy stock for a dollar and year later it is worth 2 dollars but there is no tax until you sell then the gain of one dollar would be taxed at 20%. The Netherlands new law says that you will pay the tax even if you don’t sell and it will be at 37%. This in essence, removes the special tax status from the gains. If the US would adopt this then the special status for investment income would no longer exist. It would hit mostly higher income people and bring in about $10 billion per year. On the downside it would discourage investment.