Should Australia consider zero income tax for its youth?

by Chris Becker

Given that the entire body politic and economic system is geared towards screwing the younger generations with systemic high house prices and the life long debt bill that entails – or an equally perverse rental system – plus limited employment opportunity, this idea from Poland may have merit in the years to come. From France24:

Polish lawmakers have approved a measure that would exonerate most workers under the age of 26 from income taxes as the country seeks to stem the flow of its young people to other EU nations in search of better paying jobs.

The bill would exonerate workers under the age of 26 from Poland’s 18 percent personal income tax for those whose gross earnings don’t surpass 85,500 zlotys (20,000 euros, $22,500) per year.

That level is higher than Poland’s average income, estimated to be around 60,000 zlotys per year before tax.

The approval of the measure by the upper house of parliament and its signature by the president is widely expected.

Some two million people could benefit from the measure, according to supporters of the legislation, which should enter into force from August 1.

Poland has long been haemorrhaging skilled workers to other EU states where they can find better paying jobs, posing both a long-term demographic risk and short-term problem finding enough labourers to continue the country’s streak of economic growth since the fall of communism in 1989.

Australia is going to have to consider some radical measures in the years to come, as the youth discover the benefit of global employment opportunities and much lower house prices abroad. With the Coalition and Labor hell bent on increasing compulsory superannuation savings – basically increasing income tax for non-retirees – and completely abrogating any actual investment in future proofing the country against economic, strategic or climate change crises, the call to expatriate will only grow louder.

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  1. Given how much the younger people (less than ~40) have been screwed, I’m generally OK with the idea of reducing the burden on the young….

    Problem is, though, it effectively allows an increase in the money/demand-side that can be thrown at mortgages – the cynical FHB-type house flipper would just increase the price to suit…

    • Realistically, in Australia the wealthy will just use family trusts to gain the most benefit possible from this idea.

      • These plans are only ever made with the wealthy in mind. So I wouldn’t be surprised if there was some sort of scheme instead of just making life in general a bit fairer. The wealthy kids doing uni but still making 100k at dad’s business somehow.

  2. HadronCollision

    As long as at 40yo I am considered young
    Nope sorry
    They need to work harder to get a better job that pays more
    How good is having a go to get a go!

    Jesus, is this where we’re at
    Just cut Teh Gates!

  3. Poland has about 30% social security tax paid by the employer, income tax for these salaries would have been only 18%. Not much of an impact.

  4. How exactly could that even be possible when they have to pay for the pensions they’re not going to get, the tax the self funded retirees don’t pay, the tax the negative gearers don’t pay, and the corporate taxes the multinationals don’t pay?

  5. Bribe the young not to leave? No need. There aren’t many places they can easily escape to.

  6. Just where do you think all those young people will go. Few countries are as open to immigration as Australia.

    • This. Poland is part of the EU and has a heap of countries within reach so the young have options. Australian youth can’t emigrate to greener pastures as easily.

    • UK, Europe, America, Canada, New Zealand, Scandinavia….etcetcetc Doesnt have to be permanent migration, I foresee a lot of people doing stints overseas and then holidaying back here, then returning overseas again. Not just Australians either – the global youth are just that.
      Opportunities abroad are immense. Wish I was twenty years younger…

      • Holiday back for medicare. At least they are actual Australians unlike the foreign relatives of new Australians borrowing medicare cards.

  7. The Canadian Tax Free Savings Account is a good model that we could adopt into our Super system.

  8. This is the dumbest idea ever, like all young are in the same situation. magine all those six/seven/eight digit family trust distributions to under 26 family members.

    We don’t have a problem of young people paying too much tax, our problem is speculators, some elderly and wealthier not paying enough tax.
    Young are not screwed by large tax but by large costs created by low taxes on asset speculations. Make extra 20% CGT on property speculations, normal CGT at top marginal rate and all re-zoning related capital gains at 95% and young are going to be fine with paying current taxes.

    Cutting tax to all young/old/middle aged regadless of their income, wealth, … is just another way to screw current and future generations

  9. First give them free food and tampons.

    Tory plan to scrap free school lunches

    Theresa May’s conservative government has announced plans to provide free sanitary pads and tampons to high-school girls in England

  10. Wouldn’t businesses be all over this? Then they just pay a lower salary to anyone under 26 because they’re getting more net?

    • Jumping jack flash

      I don’t know if it works like that….

      But they could probably feel a bit better about stealing more wages from the foreign uni students working at the cafe.
      Actually, this could be good for increasing the giant wad of debt our economy is perched upon, so maybe it isn’t a bad idea after all.

    • Bosses are already paying Aussies as little as possible or simply bypassing Aussies completely and hiring foreign “students” for $10/hour.

  11. Jumping jack flash

    In the new economy you need to frame decisions in terms of the effect on the debt. The debt (and the banks that create it) is all that matters.

    They would only consider this if it enabled youth (or perhaps their employers) to take on more debt to transfer up to the next rung on the property ladder (enabling that rung to take on more debt to transfer up the ladder, etc, etc). Since “youth” aren’t generally in the market for economy-crushing sized mortgages then probably there wouldn’t be a lot of advantage for them not paying tax to boost their debt capacity.

    So I don’t think its a case of “should they consider zero income tax for youth”, its more a case of “would they consider zero income tax for youth” and the answer is no. There’s not enough advantage for the banks to have youth not pay income tax.