Richard Reisch, Die Reform der directen Besteuerung in Holland (1893)

Richard Reisch examines N. G. Pierson’s Dutch tax reform through its legislative provisions, explanatory memoranda, and parliamentary debates. Moving from the reform programme to the wealth tax and proposed business and professional tax, he assesses their conceptual foundations and international consequences. He welcomes redistribution without increased state revenue, while identifying inconsistencies in the treatment of foreign taxpayers.

The programme connects relief from consumption taxes and transfer duties with heavier contributions from wealth. Parliamentary extensions of the proposed relief make the wealth tax especially important to fiscal balance. The direct taxes serve complementary purposes: the wealth tax finances redistribution, while the business and professional tax replaces the patent tax and supplements the taxation of capital.

Reisch’s central distinction separates a tax’s legal form from its economic object:

Die Vermögensteuer soll nach den Ausführungen des Motivenberichtes nur die Form einer Vermögensteuer tragen, aber als Partialeinkommensteuer, als welche auch die Betriebs- und Berufsteuer gedacht ist, wirken; als Besteuerungsobject erscheint daher nicht das Vermögen, sondern die von diesem Vermögen zu erzielende Vermögensrente, welche der Motivenbericht ohne Unbilligkeit allgemein mit 4 Proc. veranschlagen zu können glaubt, umsomehr als die wichtigsten Bestandtheile des unfruchtbar angelegten Vermögens, wie Möbel, Schmucksachen und Kunstsammlungen bei der Berechnung des Vermögens ausser Anschlag bleiben.

English translation: According to the statements of the explanatory memorandum, the property tax is to bear only the form of a property tax, but to operate as a partial income tax, as which the business and occupation tax is likewise conceived; the object of taxation therefore appears not as the property, but as the property rent to be obtained from this property, which the explanatory memorandum believes it can, without inequity, assess generally at 4 per cent, all the more so as the most important constituents of property invested unproductively, such as furniture, articles of jewellery and art collections, remain out of account in the calculation of the property.

The wealth tax is intended to reach presumed income rather than consume accumulated assets. This interpretation organizes Reisch’s account of valuation, exemptions, debt deductions, and the restriction to natural persons. It distinguishes the Dutch measure from Prussia’s proposed supplementary tax, which addresses the additional taxable capacity associated with secure, enduring income. Similar fiscal forms can thus embody different understandings of ability to pay.

The presumed four-percent return coordinates the Dutch taxes. Deducting it from business earnings separates capital income from entrepreneurial earnings; adding it to earnings where wealth falls below the wealth-tax threshold prevents separate exemptions from sheltering an otherwise taxable total. Reisch finds the preferential treatment of labour income more persuasive than the administrative case for dividing income taxation. Labour receives a higher exempt minimum and lower rates.

Administrative feasibility nevertheless helps explain the wealth-tax form. Registration and inheritance-duty officials possess information about assets, whereas other officials and commissions are better equipped to assess earnings. Declarations, appeals, confidentiality, and penalties show that equitable taxation depends on institutional knowledge as well as rates. Reisch criticizes rent-based presumptive assessment for overlooking differences in housing expenditure across income groups, and objects to imprisonment for unpaid fines.

Progression is justified through the distribution of burdens across the fiscal system:

Hier sei nur noch erwähnt, dass sich der Finanzminister bei Rechtfertigung der vorgeschlagenen Progression ausdrücklich gegen die Unterschiebung socialistischer Tendenzen verwahrt und darauf verweist, dass dieselbe lediglich als ein Mittel vorgeschlagen werde, um innerhalb des ganzen Steuersystems zu einer Besteuerung nach dem Verhältnisse der Leistungsfähigkeit zu gelangen.

English translation: Here it need only be mentioned further that the Finance Minister, in justifying the proposed progression, expressly guards against the imputation of socialist tendencies and points out that it is proposed merely as a means of arriving, within the whole tax system, at a taxation according to the proportion of ability to pay.

Expenditure taxes cannot secure this result alone because expenditure does not increase proportionately with income. Reisch’s comparison of rates clarifies the differentiated treatment of earned and capital income. His discussion of cooperatives and mutual associations likewise tests the consistency of the taxable-income concept: distributions generally count as profits, with exemptions for specified workers’ mutual-aid associations.

The international discussion qualifies his approval:

Der zweite jener Punkte, in welchen der Entwurf einen eigenartigen aber theoretisch kaum zu billigenden und praktisch vielfach unausführbaren Standpunkt einnimmt, betrifft die Regelung der internationalen Besteuerungsfrage.

English translation: The second of those points in which the draft adopts a peculiar standpoint, one theoretically hardly to be approved and in many respects practically impracticable, concerns the regulation of the question of international taxation.

Whereas the wealth tax follows residence, the business tax also reaches non-residents competing with Dutch firms. High presumed profits and application of the highest tariff can turn taxation into industrial protection. Reisch doubts the practicality of collection from foreign traders through domestic intermediaries. Without a general provision for reciprocal treatment, conflicting national principles threaten overlapping burdens. The article’s central tension lies between domestic redistribution and international inconsistency: the reform carefully differentiates capital and labour while compromising equitable personal taxation at the national boundary.