Why should a 25 year old graduate pay a tax that a 50 year old graduate does not?

Because even in MMT someone has to.

And the key benefit of the new system is it’s actually increased participation in higher education outside of the traditional middle classes.

The horse has bolted on Gen-X paying back for it’s education, it wouldn’t be a vote winner.

If more education means greater earning potential, then once you earn more, you would pay more tax.

So in an ideal world where people did degrees based on their value to society, that might work.  A trade  derives a benefit from graduates in their field. Welders benefit from more engineering grads. Farmers benefit from vets. Electricians benefit from electrical engineers.  Everyone ends up being more productive and can pay more in taxes to fund that benefit.

What’s less beneficial is someone doing a degree, then becoming a welder or farmer because they enjoy it.  The loss then is the fees and economic inactivity.  There should be an incentive to leave school and do an apprenticeship in welding or farming for that person.

“Whats better for the UK a whole? Focusing the profit on the pension co retaining the bulk of it or Scenario 2 where more wealth is distributed around the economy?”

This is TikTok economics. Pension funds don’t just sit on money, they invest it actively using the most sophisticated systems and educated people to squeeze every last shred of growth out of it. And sometimes that still turns out to be a disaster. But whatever happens the net impact of that investment across the economy is gonna be better than individual divs like us buying consumption goods (tat) and then ending up on benefits for the rest of our lives, being a drag on those still in the workforce.

This doesn’t answer the question, quite the opposite, but is worth a read.

Whilst no one can claim levelling up has been a success, I was pleasantly surprised to see funds actually being used to save an iconic building/venue local to me.

https://www.bbc.co.uk/news/uk-england-south-yorkshire-68646715

*** edit – actually can’t be bothered***

Because even in MMT someone has to.

What kind of answer is that? Why should young people pay an additional tax, starting at £25k of income, that older people do not? I can’t see any answer other than to discourage young people from eduction… or even more cynically, because there’s more older voters that benefit from this imbalance, so turn the screws on those least likely to vote for you anyway.

What kind of answer is that? Why should young people pay an additional tax, starting at £25k of income, that older people do not? I can’t see any answer other than to discourage young people from eduction… or even more cynically, because there’s more older voters that benefit from this imbalance, so turn the screws on those least likely to vote for you anyway.

well a lot of older people will already have paid for their education either up front or via a paid off loan, so making them pay twice for something seems deeply unfair.

I think a grad tax for anyone who attends a course after date x on any earnings above y is a reasonable thing – its effectively the same pattern we have today but without the mental burdon of extra debt sitting over you.

Minister for anti-wokeness got tax payer help for her mortgage on her 2nd London home (her other house was being let out).

That policy certainly worked for her.

well a lot of older people will already have paid for their education either up front

Us oldies paid nothing for our higher education. We may have funded most of our living costs (and obviously choose to forgo most of our wages while studying) but the education itself was paid for from general taxation. There is no reason for the education of young people to be funded only by young people other than to deter them, or because the political power lies with the older generations who are happy for it to be that way.

I think a grad tax for anyone who attends a course after date x on any earnings above y is a reasonable thing

Or, all high income and high wealth individuals pay more tax… if the state requires more taxation as a tradeoff for funding the education of young people.

Julie would not have gone to university if it was loans.   From her not well off background she had a fear of debt.  Logical or not that was her position

“Us oldies paid nothing for our higher education.”

I don’t know how old you are but practically no-one was a student or a pensioner when my dad went to uni: there were loads of taxpayers for every person supported in studying or old age. Now, practically everyone will make it to being a student, pensioner, and maybe both in their lifetimes. We expect old people to pay pay their own nursing homes. We expect working people to pay for their own retirement (through erosion of the state pension).

This isn’t really an argument for or against anything. More a lament

This is TikTok economics. Pension funds don’t just sit on money, they invest it actively using the most sophisticated systems and educated people to squeeze every last shred of growth out of it.

Pension funds invest in businesses that invest almost anywhere other than the UK or even Europe. Pensioners blowing their pension pots buy a British/Geramn/French motorhome, get domestic builders in using locally made materials, eat out in local restaurants and stay on UK campsites.

Educating students (poorer students) for free is a no brainer in terms of return on investment for society. Older people paying for their care is means tested and their assets are protected to some extent. The old definitely get the better deal.

Scenario 2 : Person pays into pension all their working days and on first day of retirement, age 67 gets hold of their pot. over the following 20 years proceeds to spend all that pot on going to Dobbies garden centre, going out to cafes, buying camper van / going on holiday / cruises, getting their house decorated and garden done. Once they reach 87 they’re “broke”.

Scenario 2 is more likely this:

Retire at 60 and spend all their pot by the time the State Pension kicks in (67/68).

Most peoples’ “pots” aren’t big (in pension terms).

Julie would not have gone to university if it was loans.   From her not well off background she had a fear of debt.  Logical or not that was her position

A bit hard to have a policy that takes into account illogical fears…

Or logical ones?  Thats very paternalistic and judgemental of a position you do not understand

I think a grad tax for anyone who attends a course after date x on any earnings above y is a reasonable thing – its effectively the same pattern we have today but without the mental burdon of extra debt sitting over you.

I get the mental burden / paternalistic / judgemental angle as mentioned by TJ and it is a very real thing. ML however described it differently – we do effectively have a graduate tax. It’s not like a loan in 2 key areas. 1/ you aren’t obliged to pay it back, you pay back what you can ‘afford’ (where afford is dictated by % over thresholds, etc, rather than optional) and whatever isn’t covered doesn’t last forever, if is eventually written off if you haven’t afforded to pay it back; 2/ it doesn’t count on credit records for affordability.

The interest calculation is a harder to justify angle rather than the actual theory behind the student loan IMO.

In the example above – Grad Tax – how long do you pay that for? For ever? Or just for a fixed period – that’s basically the same as the loan then, except the loan’s capital sum is irrelevant. As indeed it is for may student loan owners; who pay X% on earnings above Y for Z years and who cares what the loan amount says, ‘cos you write it off after Z anyway.

Going back a good few years but has anyone mentioned John Major’s “cones hotline”

That was a game changer wasn’t it?

What Joe-m said

Mrs Thatcher stopping the unions having so much control.

Yep, they’ve been massively successful in increasing the Gini coeffiecient. Leading Europe we are!

Can’t believe that I’ve not seen a mention of Brexit- that policy worked, but the promised outcomes haven’t.

They are doing a great job at running down every section of education, and the health services too.

the 3 core tory wet dreams were

austerity (shrink the state)

Brexit (xenophobia + tories asserting their natural right to rule over us unencumbered by EU oversight)

Trussonomics (tax breaks for the rich)

all of which have been a disaster for the UK

That leaves the Tories with a problem, theyve outsourced all their thinking to the think tanks that pushed all this

There’s now a crisis for them, they refuse to accept that these for policies have failed but have nothing to replace them with

I fear they will just lean on harder to the culture war & ride the trumpism rollercoaster to our dooms

“Yep, they’ve been massively successful in increasing the Gini coeffiecient. Leading Europe we are!”

Not quite. 15th highest in Europe – more equal than PIGS and Luxembourg, less equal than any NW European country.

https://en.m.wikipedia.org/wiki/List_of_countries_by_income_equality

‘The report found that the richest 1% in the UK are the most expensive top 1% group in Europe, paying the lowest taxes of such a group in any large European country. The benefits of allowing this to continue are “almost impossible to defend”, said Danny Dorling, the author of Inequality and the 1%.27 Nov 2023

According to the current leader of the Labour Party and his deputy Boris Johnson’s levelling up policy was a great idea, and the next Labour government will make work.

https://www.politico.eu/article/boris-johnson-was-right-say-uk-labour-opponent-labour-leader-keir-starmer-angela-rayner/

Wealthiest kids get no debt as mummy and daddy pay the fees; and they probably get a house deposit too…

less well off kids who follow a well paid career path, leave with debt but quickly pay it off so pay less in total student loan than poorer paid

less well paid jobs that still earn significant money over their lifetime (like nursing, teaching etc) pay the most in loan repayments

people who earn little, pay nothing, even if earning little is a “choice”.  People who emigrate pay nothing.

real social mobility stuff!

I don’t have a perfect answer, but if we assume the average graduate earns more then general tax across their lifetime seems appropriate.  The alternative would be for employers to pay – after all they are supposedly the real beneficiary… gov could easily modify tax system to make that attractive – but then the public sector jobs would need to do it too…

some interesting analysis from the IFS, which counteracts common thinking :

https://ifs.org.uk/articles/how-tax-burden-high-when-most-us-are-taxed-so-low

That top 1 per cent pay 29 per cent of all income tax now, up from 25 per cent in 2010 and 21 per cent at the turn of the century. Whisper it quietly, but this Tory government has taken a serious chunk out of the incomes of the 1 per cent.

Someone on £35,000 today — about the average for those working full-time — faces an income tax and national insurance bill getting on for £2,000 lower than would someone on the same real earnings back in 2010.

It rose dramatically between 1979 and 2008 despite the tax system becoming much more favourable to the rich. It rose because the rich got so much richer: there was a lot more income to tax. That has not been the case over the past 15 years. The tax take from the rich has risen because of policy change.

I don’t even believe the rich are really better off. I’ve got more money, sure, but quality of life is way down in all sorts of ways.

intheborders
Free Member

A bit hard to have a policy that takes into account illogical fears…

It is hard but sometimes doing the job is hard. People’s attitudes have to be taken into account, regardless of how rational they seem. If 10% of people don’t want to go to hospital on a sunday, for instance, just saying “that’s illogical” doesn’t fix it.

For student loans, the biggest influencer is whether or not you have experience of long term borrowing in your friends and family. Whether that be a mortgage, a business loan, whatever. People without experience of that are significantly less likely to want to borrow in order to study. Which almost, but not quite, boils down to whether your parents (and other adults that you know well) are homeowners or renters, business owners or employees. And then, multiply <that> by their experience of unproductive debt- were your family poorer than they had to be because they were paying interest.

And this is really, really difficult to push back against- at a national and institutional level there’s a load of groups working hard to improve progression into higher education from low progression areas, low progression schools, for women into stem, adults back into learning, all difficult but relatively easily targettable groups. But people who simply recoil from the idea of being massively in debt, even productively, are extremely hard to target and support and encourage. Broadly speaking if you start, at the earliest age when people start thinking about university, by thinking “That is unaffordable for me and I dont’ want to be in debt”, you’re never likely to get back on.

When the big tuition fee hike to £9000 came in, the amount of effort dedicated to countering that was incredible- I mean, for about 3 years it was essentially the only thing we did at my university, every other outreach project basically stood still. Bursary and scholarship money got redirected, every talk we gave at an open day or an english school was massively rebalanced to try and deal with it. And there was tons of work at national levels, at school levels. We had to be proactive to the point of aggression just to have a chance.

And in the end, it seems like we more or less broke even. The exact students that made it to uni would have changed but after 5 years or so of the biggest single outreach effort since the post 92 expansion, it ended up pretty much neutral in terms of getting low income kids and poor area kids into uni, after all that work. So that was a success, sort of, but the opportunity costs were incredible.

And all just for “illogical ideas” and because of a government that didn’t take those fears seriously and had little comprehension of the thinking involved, let alone care.

Oh, I meant to add to this but… The £9000 student loans policy absolutely worked, but not how people think it worked. The changes of repayment methodology mean that it now costs the taxpayer £15200 on average for every single student loan issued, according to the IFS. And even that’s based on official government repayment predictions, which tbf were utter made up bullshit even when the economy was healthy, the reality will be worse.

What the student loan hike was really about was taking a huge chunk of the national debt, and giving it to teenagers to carry for 30 years, so that it can be written off in 2054 under some future government’s watch. In March 2023 the student loan book was £206bn, so it amounts to about a 12th of the entire national debt.

It’s an accounting scam. And it’s worked great.

5labFull Member
some interesting analysis from the IFS, which counteracts common thinking

The IFS is not a disinterested observer, it’s a pressure group masquerading as a think tank.

To be fair, the new smoking ban will work, but not because of policy, just that fewer people will be smoking from natural attrition that is happeneing anyway.

They will of course spin that as a win….even though it’s something that is already happening without policy or law change.

The IFS is not a disinterested observer, it’s a pressure group masquerading as a think tank.

Possibly (I’ve no idea), do you have anything that refutes their analysis of tax take I linked? I’d be interested if it’s inaccurate

Given the ifs status as a right wing pressure group i think its fair to suspect that its carefully selected data if not just made up.

The fact that this even a conversation, is quite funny.