The idea that young workers are taxed far too much while rich pensioners sit back and gloat is an entrenched grievance for a certain type of Left-leaning economist.
One of Labour’s favourite think-tanks, the Institute for Public Policy Research (IPPR), has just put out a paper arguing the tax system is ‘slanted towards the interests of older Britons with large amounts of accrued wealth and away from younger earners’.
The ‘balance of responsibility’ for meeting the nation’s growing fiscal needs, the author adds, must shift.
This conflation of the old and the rich is a basic logical fallacy.
Just because most rich people are old does not mean most old people are rich.
Nearly 2million pensioners are in poverty – or around one in six. Many of those are women, either widowed or divorced.
Yet the ageist stereotype of the elderly miser, found in the works of Roman playwright Plautus, as well as Moliere and Dickens, is clearly still potent in Leftish economic thinking.
The bogus assumption, never quite spelt out but lurking just beneath the surface, is that it is somehow unfair for older people to be better off than the young.
Entrenched grievance: The idea that young workers are taxed far too much while rich pensioners sit back and gloat is an entrenched grievance for a certain type of Left-leaning economist
The reality – that most older individuals have built any wealth they possess through years of work and investment on which they have already been fulsomely taxed – is ignored.
One of the IPPR’s ideas is to change the rules where older employees are spared from having to pay any National Insurance Contributions (NIC) after they reach retirement age.
The think-tank cites the case of a pensioner versus a graduate at income levels of £45,000 and £70,000, saying the former would pay a marginal rate of 20 per cent and 40 per cent respectively, while a youngster repaying a student loan could face rates of 37 per cent and 51 per cent.
It floats the idea of imposing NIC only on comparatively well-paid pensioners, which may not seem so unreasonable.
But if the principle of bringing pension-age people into the net were established, it would probably act as a Trojan Horse, raising the risk that more ageing workers would be pulled in over time.
Conservative and Labour governments have deployed such ‘fiscal drag’ mercilessly to milk taxpayers over the past few years.
If that happened, it would be very harsh. Among the 1.75million over-65s who still work, median monthly earnings are a modest £1,596, lower than every other age group apart from the under 18s.
We do not know how many want to stay at work and how many are compelled to by financial hardship.
Women, some ethnic minorities and manual labourers, whose interests the Left purports to defend, are much more likely to find themselves in the ‘forced to’ category, according to the charity Age UK.
How are they enjoying the fruits of a skewed tax system just because they are older?
And how insulting to say the old must pay more tax because they are not shouldering their financial responsibility to the young: just look at the multibillion-pound collective generosity of the Bank of Mum and Dad.
Labour is already undermining this natural impulse through changes to inheritance tax.
Other suggestions to hit the elderly are higher capital gains tax rates and property levies.
The IPPR is correct that an ageing population will become an enormous pressure on public finances. Yet to assert that younger workers are suffering an unreasonable burden while rich oldies are ‘protected’ is not a solution: it is simply the peddling of divisive and unpleasant prejudice.
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