The Netherlands just approved a 36 percent tax on unrealized gains, and the move should make every American pause and think about where expanding taxes can lead.
The Dutch Parliament voted on February 13 to impose a 36 percent tax on unrealized capital gains in stocks, crypto, and bonds. That sounds like an abstract policy wonk exercise until you picture ordinary savers being forced to sell assets to pay a tax on gains they never cashed out.
People on the political Left have long chased ways to grab more revenue from wealth they did not earn this year. They genuinely believe all our money, including the “imaginary” money that is unrealized capital gains, belongs to them, and that belief shows in policies that punish investment and savings.
These policies do not stay limited to the ultrawealthy. The history of taxation in America proves that promises of limited scope tend to expand. Once you accept taxing unrealized gains, the logical next targets include retirement accounts, stock portfolios, and eventually primary residences.
Consider a simple example to make it real: if you own $50,000 of bitcoin in 2025 and it climbs to $100,000 in 2026, that $50,000 is an unrealized gain until you sell. Under the Dutch plan you would owe 36 percent on that $50,000, which is $18,000, even if you never cashed out and even if the price later collapsed to $30,000.
Most people do not sit on cash cushions large enough to cover a surprise tax bill based on paper gains. The predictable result is forced selling, market distortions, and capital flight as investors pick safer, friendlier jurisdictions. Taxing unrealized gains is a surefire formula for making sure no one invests in your nation, and that those who are wealthy enough to do so will leave your nation.
We already have real-world precedents where punitive taxation pushed money and people away. Proposals like one-time wealth levies or other extravagant taxes drove billionaires out of states that flirted with similar ideas. When governments make holding assets risky, the wealthy relocate and investment dries up for everyone else.
Some on the Left insist these schemes only hit the richest. That language mirrors past promises about the income tax and recent talk about taxing only “high-net-worth” individuals. In 2024 the Biden administration floated a 25 percent tax on unrealized capital gains for “high-net-worth” individuals, and commentators warned it would “crush the [American] economy.”
History and incentives matter more than slogans. Governments rarely stop at a narrow class when a new revenue stream opens. Power expands, and so does taxation, especially when politicians grow dependent on larger budgets and grand spending projects. The Dutch gamble is a stark demonstration of that dynamic.
Critics call the Dutch plan economically illiterate because it severs the link between investment returns and real liquidity. Taxing paper gains ignores market volatility and punishes prudent long-term investors who do not realize gains every year. The policy also raises practical questions about valuation, timing, and enforcement that will create complexity and gaming.
From a conservative perspective, the lesson is clear: you protect prosperity by protecting property and returns on capital. When taxes are structured to punish accumulation and risk-taking, growth stalls, and middle-class opportunities shrink. Letting governments claim unrealized gains is a bridge too far for anyone who believes in free markets and secure retirement.
The Dutch may learn these consequences the hard way. For Americans, the takeaway should be to scrutinize any proposal that promises to tax wealth only at the top. Promises made during political fights rarely remain confined, and once a mechanism for seizing paper value exists, it will be tempting to expand it.
Letting policymakers redefine what counts as taxable income sets a dangerous precedent. If unrealized gains are fair game, then no asset class is safe from future grabs, and the incentives that drive innovation and investment will be weakened across the board.
