The Return of Wealth Taxes: California and The Netherlands

Here it comes... and there goes the tax revenue and wealth

Mary Pat Campbell

Feb 18, 2026

Getting back into podcasting by looking at the recent wealth tax proposals in California and the Netherlands. The Box 3 “reforms” have already passed in The Netherlands and to go into effect in 2028, and in California, the wealth tax is likely to be a ballot proposal to be put in front of voters this fall in 2026, but backdated to January 2026. I look at the proposals at a high-level, some initial responses, and what the actual goals of these taxes are.

Amsterdam Banker, from World's Dudes series (N31) for Allen & Ginter Cigarettes, 1888 — from Met Museum of Art

Netherlands Investment Tax: “Box 3”

NL Times, 13 Feb 2026: Dutch parliament greenlights new Box 3 tax, set to take effect in 2028

Despite considerable resistance, a large majority in the lower house of the Dutch parliament approved a new system for taxing the returns on assets, also known as the Box 3 tax. The new system, which taxes returns based on the actual increase in the value of assets, is set to take effect in 2028.
The Dutch government had to change the Box 3 tax after multiple courts ruled that the current system is unlawful. The current system taxes assets based on fictive gains - how much the Tax Authority assumes assets have increased in value over the taxable period, based on past returns. The Tax Authority also calculated the tax based on an assumed distribution of assets across savings and other investments, called the “asset mix.”
….
The Tweede Kamer greenlighting the Box 3 reform is not the end of the issue. A majority asked the new Cabinet to, once the new system is implemented, change the way in which returns on things like stocks, bonds, and cryptocurrencies are taxed.
The new system taxes the unrealized gains on these assets - the profits of investments that have increased in value, but haven’t been cashed out yet. Parliamentarians don’t like that this will result in people paying tax on money they don’t have yet. A majority, therefore, asked the government to come up with a way in which investors only pay tax on realized returns - money in their pocket once they sell the asset involved. They want the government to present that plan by Budget Day 2028 at the latest.
The Box 3 reform is costing the government billions. Not only does it have to refund overpaid capital gains taxes, but affected taxpayers may also be entitled to interest on those repayments. The Ministry of Finance has not yet formally decided whether the interest—known as belastingrente in Dutch—will be paid.

Helpful comparison from Google Gemini, take it for what it’s worth

NTL Trust International, accessed 17 Feb 2026: Netherlands Box 3 Reform: Structural Shifts and the 36% Tax

Man, there are so many OTHER asset types than these

Liquidation Contagion

Balaji Initial Post

15 Feb 2026, X/Twitter:

Balaji@balajis

LIQUIDATION CONTAGION Wealth taxes are even worse than you think. Any asset held by Californian billionaires or Dutch citizens is now at risk of experiencing forced liquidation pressure. So: it’s not just that you don’t want to hold assets as a Dutchman. You also don’t want a

5:55 PM · Feb 15, 2026 · 562K Views

341 Replies · 797 Reposts · 4.37K Likes

Text:

LIQUIDATION CONTAGION

Wealth taxes are even worse than you think. Any asset held by Californian billionaires or Dutch citizens is now at risk of experiencing forced liquidation pressure.

So: it’s not just that you don’t want to hold assets as a Dutchman. You also don’t want a Dutchman to hold your assets. Because the logic of forced liquidation is contagion.

Let’s think it through.

(1) First, suppose there is an asset with a total market cap of $10,000, with 10 shares total, of which 1 share each is held by 10 different holders, all in the Netherlands. To simplify the math, assume the Dutch holders bought those shares at par, or close to $0.

(2) Now suppose today is the unrealized cap gains tax day, and the share price is $1,000 per share. Each Dutch guy is hit with a 36% tax, and owes $360. The first guy sells his one share, gets $1,000, and pays $360 in tax while retaining $640.

(3) But the first guy’s sale reduces the market price to $960 per share. So when the second guy sells, he only retains $600 after paying $360 in tax.

(4) Now assume that by the 7th guy, all the selling has pushed the share price to collapse to $200 per share. This is a very reasonable scenario if 60% of the cap table has suddenly been dumped. Indeed it might go much lower.

(5) At $200 per share, the 7th guy actually has to go into debt to pay the tax as he owes $360. He sells his one share, pays all $200 of the proceeds in tax. And still owes $160 more in tax.

(6) The 8th, 9th, and 10th guys are even more screwed. By the time they sell, the price will likely have crashed to $100 per share or less. As with the 7th guy, even 100% liquidation will not cover their tax burden.

(7) So we immediately see many negative things about the Dutch unrealized cap gains tax bill.

(a) First, it will cause large simultaneous forced liquidations. Everyone must sell 36% of their stake near the same time.

(b) Second, it may be literally impossible to pay if a critical mass of the cap table is all subject to it at the same time. In the example above it was 100% Dutch holders, but has it been just 60% the result would have been much the same: a collapse in the share price.

(c) Third, that means it would be disastrous to have too many Dutch citizens (or Californian billionaires!) on the cap table. Their forced sales will crash your share price.

(d) So, you might have to start mass blocking those resident in wealth-taxing jurisdictions from investing in your companies.

(e) This in turn makes the poor Western European guy even poorer, as he gets locked out of high growth assets.

To be clear: I really do feel bad for the formerly Flying Dutchmen, now Crying Dutchmen. They invented much of modern capitalism. They founded New Amsterdam, now New York. They’ve punched way above their weight. I wish them only the best.

Nevertheless…they should prepare for the worst. This may be a tough century for Western Europe. The first ones out might get to freedom, while the slowest may be stuck behind a new Iron Curtain, spending a century paying off the debts their states incurred over the last century.

Because the long run fruits of Western Keynesianism are the same as Soviet Communism, in the sense of wealth seizure and pauperization.

I mean, if you knew the future, you wouldn’t want to co-own a farm with a Russian in 1916. For similar reasons, you might not want to co-own a share of stock with Dutch national in 2026. Or with anyone in a seizure-curious jurisdiction…which unfortunately includes much of Western Europe, Canada, and Blue America.

You instead want assets that are not held by those subject to forced liquidations. Now, I grant that this is an unusual way to rank assets…Dutch holders considered harmful?!? Yet it might sadly be necessary to minimize your exposure to liquidation contagion.

PS: guess which crucial stock is most held by the Dutch? ASML. So: this unrealized cap gains tax may not literally be a communist plot, but it would have the same effect.

In the replies:

TJC Invest@Investprosper12

@balajis @grok

7:45 PM · Feb 15, 2026 · 1.71K Views

18 Likes

Doesn’t tell you, of course, how one has to keep track of the investments one holds via ETFs/mutual funds via companies such as BlackRock.

BlackRock, etc., “owns” these assets on behalf of OTHER people. “But it’s for a pension fund!”

Which, again, is for OTHER people… but I assume pension funds are out of scope for this tax….. [maybe I shouldn’t assume… all governments are hungry for tax revenue]

Cross-contamination of systems

15 Feb 2026, Reddit: Box 3 in 2028: taxed on unrealized gains in NL and realized gains by US | how do people deal with this?

Not copying the text — but keeping on with the having to liquidate assets theme to pay a wealth tax on UNREALIZED gains, but when liquidating, one REALIZES the gains…. which triggers REALIZED GAINS TAXES in other tax jurisdictions.

WHUPS

California Wealth Tax

NYPost, 8 Jan 2026: Wealth tax threat prompts at least six billionaires to cut ties with California, as about 20 more mull exit: report

The threat of a steep new wealth tax in California has reportedly prompted at least six billionaires including Larry Page and Peter Thiel to cut their ties with the state — and as many as 20 others could be heading for the exits.
The half-dozen billionaires made their moves before New Year’s Day — the cutoff date to avoid a potential one-time tax of 5% on fortunes exceeding $1 billion — which California residents will vote on in November, according to Bloomberg News.
David Lesperance, a tax adviser who specializes in relocating ultra-wealthy clients out of high-tax jurisdictions, told the outlet he personally helped four billionaires end their California residency before the proposal’s Jan. 1 cutoff date.