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Academics critique government fiscal stimulus policies


Tags: Excerpts from the Windmill

THE HAGUE A Dutch economist and philosopher has concluded that her compatriots think of themselves as sophisticated money managers who excel in finding all sorts of advantageous benefits allowed by the Dutch taxation branch. Erica Verdegaal, who writes extensively on personal financial planning begs to differ, and instead argues that many people are captives of a system that offers all sorts of exemptions and deductions but which upon closer scrutiny are not advantageous at all. She notes that the costs of tax deductible provisions often are higher than the net benefits. A case in point is mortgage deductibility, which often dictates what homes the Dutch purchase. A mortgage is no longer viewed as a debt but as a tool to beat the rules of the taxation branch. Similarly, mortgage insurance in the Netherlands may not be the best coverage since the mortgages are rolled over, often along with the policies. Financial markets expert Arnoud Boot blames mortgage deductibility in western countries as a reason for the current credit crisis, which has also hurt government budgets significantly. Boot observes that governments push people to take on debt while maintaining or building up wealth is taxed. Taxation expert Roland Brandsma, who joined the others in writing recommendations on how the government could survive the credit crisis, suggests that it is cheapest to accumulate wealth away from government stimulus policies.